Home insurance can get to be very expensive. Here is the list of factors that will affect the amount of your home insurance premium.

When a team of underwriters takes a look at your home insurance application, they will take into consideration a lot of factors. These determine the premium you will have to pay. In this post, we will take a look at some of the factors that will affect the cost of insuring your home.


Cost Of Home Insurance

Cost of Replacement

The cost of replacement is a particularly misunderstood factor when it comes to the pricing of the home insurance premium. This cost is not a reflection of the current market price of replacement. Likewise, it is not a reflection of how much your mortgage is. What they mean by cost of replacement is the amount that will be needed to bring the home back to its current state. The insurance company will replace or rebuild your home up to the value that is the limit in your policy.  For this reason, many people opt to go for insurance plans that have a guaranteed replacement cause. What this additional feature means is that even if the cost of rebuilding is greater than the cost of replacement listed in the policy, the insurance company will cover it.

A good tip for saving would be to get guaranteed replacement costs that include bylaw endorsements. When you get this type of coverage, you can rest assured that you are protected. If the cost of rebuilding the home increases, it will be the insurance company that will have to cough up the additional expenses.


The neighborhood that you belong to will definitely affect the price of insuring your home. Every neighborhood comes with its own set of risk factors. If, for example, the neighborhood that your house is in has a large body of water, an insurance plan that protects against flooding will be more expensive in this neighborhood than in ones that do not have a large body of water. Other examples include neighborhoods close to the airport. These neighborhoods will have risk factors such as debris falling from planes taking off and sometimes even the loud roar of the engines.  Another factor that will definitely affect the price of the insurance policy will be the neighborhood’s crime rates, as this will increase the chances of your filing a vandalism claim.

If you live in a neighborhood more prone to floods, then get flood insurance in case there actually is a flood. If the neighborhood has a high crime rate, then install additional home security measures. These measures will help you lower the premium on your plan, as insurance companies greatly appreciate the extra effort.

Electrical Systems

It makes a lot of sense that homes with older electrical systems will cost more to insure than ones with newer systems. However, these are not the only things that an insurance company considers when it comes to the wiring of the home. Homes that have knob and tube wiring are very likely to have electrical systems that can be easily a hundred years old. These types of wiring are more prone to fires and accidents and as such, are more expensive to insure.

A very good idea might be to have the house be inspected by a qualified electrician. They inspect whether the wiring is safe or not before you purchase a home. If the home you own has a very old wiring system, it will be prudent to replace that system with a newer one. There are two benefits of installing a new wiring system. The first is that insurance premiums will be lowered and the second advantage is that it will significantly increase the value of your home.

The Condition of The Roof

It might not be surprising, but insurance companies generally prefer newer roofs over roofs that are older. A significantly older roof has many risks attached to it. There is the risk of having to make significant repairs on the roof and also the entire home is at risk of water and wind damage.

The roofing material is another thing that will affect the price of your home insurance plan. Some roofing materials are much more durable and last a lot longer than others. All of this comes into play when the insurance company is deciding on the price of insuring your home.

A good idea would be to have the roof be regularly inspected by someone that does roofing professionally. It can save you a lot of money if you do not let the costs of small repairs build up into one huge cost.

Number of Previous Claims

Home insurance is in essence an investment that you have made to protect your own property. However, it is important to understand that insurance plans have limits on them. If you are the sort of person who has already made a bunch of claims on their home insurance, this will be reflected in much higher cost for premiums. If you have more than one claim on your record, you can be labelled as being a high risk customer. The most drastic thing that can happen because of this is that the insurance company may decide to completely drop you and not cover you at all.

As we can see, there are a number of factors that need to be accounted for when the insurance company sets a premium for you. All of these factors will come into play. So it might be worthwhile for you to do as much research as possible on the topic before deciding on a plan. It might be an even better idea to get the help of a certified professional to help you navigate the world of insurance.

We hope you found this blog post on Factors That Affect The Cost Of Home Insurance useful. Be sure to check out our post on What You Need to Know About Filing a Homeowners Insurance Claim for more great tips!


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