15 Items that Impact the Cost of Homeowners Insurance

by John Kiernan on May 2, 2011

home-insurance-tipsNo more than once a year, most people will repeat the insurance ritual. When it comes time to renew your homeowners insurance, you’ll likely do one of the following:

  1. Write a check and renew the policy.
  2. Do some research to compare insurance rates.

Number two is the better choice as it helps you to be sure you are going to be getting the best insurance rates. Don’t worry. It doesn’t necessarily mean you’ll be switching insurance companies every year or two. If you find a better rate, call your current insurance provider and let them try to match the rate.

Beyond doing a little research at the time of your renewal, are there any ways to reduce the cost of homeowners insurance?

Yes, there is still one often overlooked way to decrease your insurance rates. The best part is that this may even be something you can control or impact. You can do a household inventory to see if you can make any changes around your home. The following list of items may be impacting your insurance premiums.

  1. Age of the Home – Over time things break, decay, and rust. The insurance company knows this, so the older your home is, the higher your premium will be (if age were the only variable).
  2. Distance from Emergency Services – Houses that are closest to Fire Stations and fire hydrants receive a premium break compared to houses in the country that are miles away from the nearest emergency service.
  3. Pets – If you have notoriously dangerous pets like a Pit Bull or Rottweiler, it is possible that your insurance will be affected. If you are the owner of a pet with a bad reputation then you should contact your insurance company. Otherwise, it is entirely possible that they will not cover any claims related to accidents involving the animal.
  4. House Size and Features – Typically, the bigger your home, the more expensive it is to insure. In addition, if you use more expensive materials than your neighbor (i.e. the highest quality siding or roofing), then you should also expect that to increase your premiums.
  5. Deductible – This one ought to come as no surprise. The more financial responsibility you, the homeowner, are willing to accept (higher deductible), the more the insurance company will be willing to reward you with lower rates. When renewing or purchasing homeowners insurance, simply ask what the premium would be if your deductible was $500 more than the current amount. This way you can evaluate how valuable it would be to increase your deductible.
  6. Swimming Pool and Trampoline– If you are considering putting a swimming pool on your property, a quick call to your insurance company will confirm that the presence of a pool usually increases your homeowners insurance rates. Some insurance companies will require you to build a fence around the pool. Though this does not impact the cost of your insurance, it is an indirect expense related to your homeowners insurance. Similarly, the presence of a trampoline on your property can give the insurance company a reason to increase your rates.
  7. Coverage Amount – Obviously, a policy that covers $150,000 worth of damage will cost less than one that covers $250,000 worth of damage.
  8. Incentive Programs – Insurance companies like to reward (and keep) good customers. Thus, some insurance companies will give you a discount on your homeowners insurance if you hold multiple policies with them or if you’ve been a long-time customer. Additionally, it is not unusual to have a lower premium if you are a non-smoker.
  9. Security Features – The presence of a fence or house alarm can reduce the cost of your insurance. As your house becomes more secure and you make enhancements to your security system, you should contact your insurance company to let them know about the upgrades.
  10. Contents and Valuables – Expensive valuables kept within the home will increase your premiums. In fact, depending on their value, you may even consider storing certain items in a safe deposit box at a bank in order to reduce your premiums.
  11. Credit Score – Insurance companies have started noting a measurable trend where those with higher credit scores tend to be more responsible with their property. The obvious result is those with higher credit scores get a premium reduction as compared to those with low credit scores.
  12. Insurance Company Itself – Since insurance companies use different metrics to price your insurance and also have different overhead costs, the bill for the exact same services will be different from company to company. Obviously, you can’t just compare the price difference because you will also need to compare the levels of service between the two companies. Unfortunately, with most insurance companies you don’t know if they are good until you have to make a claim. However, researching online will help you discover the reputation of different insurance companies.
  13. Riders, Terms and Conditions, and Exclusions – Policy rates are impacted based on what is actually insured. As an example, company A might be $25 more per month than company B. However, company B excludes anything to do with your pets. Thus, while the one rate may appear lower, the other might be a better value because of what is included in the coverage.
  14. Multiple Buildings – If you have a barn or shed on your property that is likely increasing the cost of your insurance. If the building is non-essential, you might consider having it torn down.
  15. Number of Recent Claims – Too many claims on your policy will negatively impact your insurance cost. Before making a claim, be sure that the premium impact is worth the return. People make unwise decisions when they choose to make claims for only a couple hundred dollars.

You control more of your insurance costs than you might have once thought. Obviously, there are some items that you cannot easily change (i.e. the age of your home). However, when you are on the hunt for a new house, you can be sure to buy a home knowing the potential impact on the cost of insurance. Still, there are many items on this list that you can change, alter, and improve in order to reduce your annual premium for homeowners insurance.

[Disclosure: Some of the links within this article point to CardHub.com, which is owned by the same parent company as Wallet Blog.]


Carlo Goldberg
Wait! I have a pit bull, but he wouldn’t say boo to a goose! He’s really friendly and lazy. Do I still have to pay higher rates!? I need to look at my home insurance ( http://aarp.thehartford.com/Property-Insurance/Home-Insurance/ ) policy more carefully; I had no idea about half these things.
May 12 at 02:05 am
The whole credit score thing is ridiculous. It is just another way for an insurance company to justify a higher rate. And did you know it is secretive? They do not tell you what the cutoff is.....so they are playing with the numbers...just like the car salesman.

Overall - excellent post...good thing for future homeowners to know. Me? I will never ever buy a home again. done.....renting from now on and not mowing any lawns! :-)
May 9 at 02:46 am

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