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How insurance companies set homeowner rates

Insurance companies consider many factors when setting homeowner rates. Understanding how these factors affect your rates - as well as shopping around - can save you money.

What companies consider when setting rates

Location

• Rates vary based upon where your house is located. Crime, wind damage and other risks vary by geographic area.

Construction type

• Rates vary based on the type of construction. For example, wood vs. a brick home.

Amount of insurance

• Your premium will vary depending on the replacement cost of your home. The cost to actually rebuild your home may exceed its current market or sales price.
• Talk to your agent or company to see if you have the right amount of coverage.

Credit history

• Insurance companies may use information in your credit history to determine your rate.

Claims history

• Some companies may charge you more based on the number or types of claims you file. They may even cancel your coverage due to one or more claims.
• Ask your agent or your company how they treat claim history.

Updated 05/08/2012