What affects homeowners insurance costs?

The following list of items may be impacting your insurance premiums and as they change, could cause premiums to rise or fall.

  • Age of the Home - An older home may be more susceptible to certain losses due to wear and tear. Insurance companies recognize this and typically have better premiums for newer homes.
  • 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.
  • Pets - If you have notoriously dangerous pets like a Pit Bull or Rottweiler, it is possible that your insurance will be affected. Likewise, if you are the owner of a pet with a history of biting people 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.
  • 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), the cost to insure will typically be higher.
  • Deductible - 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.
  • 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.
  • Coverage Amount - A policy that covers a $150,000 worth of property will cost less than one that covers a $250,000 worth of property.
  • 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.
  • Security Features - The presence of a 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.
  • Contents and Valuables - Insuring valuable items (i.e. jewelry) provides better protection for those items, but also has a cost associated. Expensive valuables kept within the home will cost more to insure than storing certain items in a safe deposit box at a bank.
  • 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 result is those with higher credit scores get better premiums as compared to those with low credit scores.
  • 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. However, 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.
  • 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.
  • 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.
  • 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.

We can help

If you have questions about homeowners insurance, visit one of our branches or call us at 1-800-443-6316.


Insurance products are offered through Think Insurance (MN license # IA-538), not Think Mutual Bank. Insurance products are not FDIC insured, are not insured by any federal agency, and are not a deposit or guarantee of Think Mutual Bank.
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Insurance products are offered through Think Insurance (MN license # IA-538), not Think Mutual Bank. Insurance products are not FDIC insured, are not insured by any federal agency, and are not a deposit or guarantee of Think Mutual Bank. This is not a policy. For a complete statement of coverages and exclusions, please see the policy contract.

The Investment Professionals of Think Financial Planning are Registered Representatives and Investment Adviser Representatives with/and offer Securities and Advisory Services through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered by CES Insurance Agency. Investments are not FDIC insured, not bank guaranteed, not insured by any federal agency and may lose value. Check the background of this firm on FINRA's BrokerCheck. Think Financial Planning is headquartered at 5200 Members Pkwy NW, Rochester, MN 55901.

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