Does my home value determine the price I pay for homeowners insurance?

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Asked April 29, 2015

1 Answer


There are many different factors which go into setting the rates for home insurance. In addition to information about the home itself, your own credit score and other personal demographics will have an effect as well. The value of the home is important, but it is far from the only consideration, and several other factors will weigh as heavily in determining what your premiums will be.

The value of the home varies over time, based on the age of the home, where it is located, and the material it is made from. In contrast, the cost of the home-- what you paid for it-- is a fixed value in the eyes of the insurance company, and what you paid for the home has little relation to what it will cost to insure. For example, a brick home will be valued higher than a wood home, regardless of what you paid for the property.

The safety rating of the home is important as well. If the home is more than 1000 feet from a fire hydrant, the premiums will be higher because the fire risk increases. If you have a security system installed, you will get a discount on your home insurance, and you will get similar, smaller discounts for things like deadbolt lock and burglar bars. By making the home safer, you reduce the risk of insuring it, and that cuts off some of the cost of premiums.

Another factor that can have an impact on your home insurance premiums is your CLUE report. This is a file of insurance claims that you have filed over the past 7 years. Claims can be any type of liability claim, not just home insurance, and if you have too many claims you will see an increase in your premiums. This is one of the best reasons for keeping your claims down to necessary events, because the more claims you file, the more all of your insurance policies are going to cost.

Answered April 29, 2015 by Anonymous

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