Factors Affecting Your Premium

Many factors affect the premium an insurer may charge, and insurers do not consider the same factors.  However, all insurers do use these factors:

Replacement cost of home

Insurance is not based upon the market value, purchase price or tax-assessed value, but on the estimated cost to rebuild the home. Most insurers use software programs with regional expense data to calculate a replacement cost based on the size and features of your home.

Type of construction

Whether your home is made of brick, masonry or wood affects the cost of your fire insurance.

Distance to fire department

This affects the cost, because the further your home is from the fire department, the longer it takes the firefighters to begin putting out the fire. This increases the likelihood of a more severe loss.

Proximity to the coast

Homes that are closer to the coast have a greater exposure to severe windstorm than other homes. This may result in higher premium, a higher windstorm deductible, or both.

Age of your home

Premium is often higher for older homes, although many insurers offer discounts if the major systems (roof, heating, plumbing, electrical) have been updated within the past 10 – 20 years.

How you heat the home

You may pay higher premiums for heating solely or primarily with wood as it increases the risk of a fire loss.

Claim history

Your claim history at your current or prior home can affect your premium.

Credit history

Most insurers also consider your credit history to determine your premium. State and Federal laws limit how insurers may use information in your credit history (PDF)


Companies offer many discounts to attract your business. Typical discounts include having other policies with them (such as an auto policy); having safety devices such as fire/burglar alarms, smoke detectors, and deadbolt locks; and having no claims for three or more years.