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-- Updated March 2026 --
This article explores key factors that influence homeowners insurance premiums and offers actionable tips to save money while maintaining proper coverage. Key highlights include:
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Help protect what matters the most to you and your family.
Homeowners insurance premiums are determined by a combination of individual and location-specific factors that insurers use to assess your overall risk profile—that is, how likely you are to file a claim. Key factors include the age and condition of your home, the materials used in its construction, your claims history, and how close you are to fire stations or water sources. Understanding these factors in detail can help you save money on home insurance while ensuring your property remains well-protected.
According to industry data, the average cost of house insurance in the United States varies significantly by state and even by location. Both your place of residence, its proximity to risk factors, and how you maintain your home play crucial roles in determining your rates.
To help save money, ask your insurance agent about available discounts for installing security systems, bundling multiple policies, or making home improvements that reduce risk. During your annual review of your insurance coverage, consider questions such as: Are there new discounts you qualify for? Does increasing your deductible lower your premium? Are there coverage gaps you should address?
Common covered perils under homeowners insurance policies include fire, lightning, hail, windstorm, snow and ice damage, explosions, hurricanes, falling objects, water damage (excluding floods), vandalism and theft.
However, coverage can vary widely by policy, so it’s important to review your insurance annually with a knowledgeable agent to understand what’s covered—and where gaps may exist. Continue looking for clear lists like this throughout the guide to help you compare policy details and exclusions with confidence.
Your location may significantly influence what you pay for homeowners insurance. According to the National Flood Insurance Program, nearly 20% of all flood insurance claims come from homeowners living in low-risk flood zones, highlighting how location impacts both risk and cost.
Tip: If you're in the market to buy a home, use free online resources like ClimateCheck to assess your risk profile and understand how a home's location may affect insurance costs.
Older homes generally incur higher homeowners insurance premiums due to the increased likelihood of damage from aging materials. Additionally, such properties may not comply with current building codes or contemporary construction standards.
Undertaking home upgrades—such as installing new heating or cooling systems, updating electrical wiring or modernizing plumbing—can help mitigate the risk of significant property loss from faulty systems or structural issues. In accordance with industry best practices, it is advisable to inform your insurance agent of these improvements, as doing so may make you eligible for a discount on your policy.
In several states, insurance companies consider homeowner’s credit when evaluating risk. Statistics indicate that individuals with lower credit scores are more likely to file insurance claims than those with strong credit histories. As a result, keeping a higher credit score may be seen as less risky and could help reduce home insurance premiums.
Yes. A deductible is the amount you pay out of pocket for a covered claim before your insurance kicks in. Purchasing a policy with a higher deductible may decrease your homeowners insurance premiums, as you're assuming more of the repair risk yourself.
Important consideration: While increasing your deductible may help lower your monthly premium, be sure to factor in your budget and potential out-of-pocket repair costs. Talk to your insurance adviser to understand deductibles and coverage options for your unique situation.
It’s important to be aware that when you submit an insurance claim, it becomes part of your ongoing insurance record. Even minor claims on your record may signal a higher risk to the insurance provider, which may lead to higher premiums. A good exercise to take is to weigh the personal financial impact of filing for monetary relief via an insurance claim against the potential for higher premiums.
Your claims history is visible to insurance companies on your Comprehensive Loss Underwriting Exchange (CLUE) report, which discloses any previous claims on your home or vehicle. Claims may stay on your CLUE report for up to seven years.
Best practice: Before filing a smaller claim, discuss the issue with your insurance agent to determine if it's worth filing or if paying out of pocket makes more financial sense.
Certain home renovations may lower your homeowners insurance premiums. According to insurance industry standards, improvements that help reduce risk—such as adding storm shutters, reinforcing your roof or using stronger roofing materials—can help you save on premiums.
Upgrading heating, plumbing or electrical systems in older homes can lower fire and water risks and may reduce insurance premiums. Notify your agent of major renovations, as they can affect your homeowners insurance rates.
Yes. Having a pool, hot tub or trampoline brings additional liability risk and can affect your home insurance premiums. Known as an "attractive nuisance," any item on your property that could be potentially dangerous—especially to children—is considered high-risk. This can raise your house insurance costs or possibly make you ineligible for certain policies.
Water intrusion from an aging, deteriorated, or compromised roof can cause significant interior damage and financial loss. Insurance providers closely evaluate a property's roof condition when determining premium rates. Adhering to a consistent maintenance routine—including inspecting gutters, downspouts and roofing—can help homeowners prevent major repairs and may lead to reduced insurance premiums.
Yes. Having pets, especially certain breeds of dogs and exotic animals, may affect your rates. Even if your dog isn't a restricted breed, a bite history could affect your homeowners insurance premiums, since dog breed restrictions vary by insurer and state/location.
learn and save
Help protect what matters the most to you and your family.
A: You can save money on home insurance by increasing your deductible, bundling policies, installing a security system, maintaining good credit and making home improvements that reduce risk. Always review your policy annually with an insurance agent to identify additional savings opportunities.
A: You should review your homeowners insurance policy at least once a year or whenever you make significant changes to your home, such as renovations, purchasing expensive items or updating major systems like heating or plumbing.
A: No. Most standard homeowners insurance policies do not cover flood damage. According to the National Flood Insurance Program, nearly 20% of flood claims come from low-risk zones, so it's worth discussing flood insurance with an agent even if you don't live in a high-risk area.
A: Yes. In many states, insurers use credit history as a rating factor. Homeowners with good or excellent credit are statistically less likely to file claims, which can result in lower homeowners insurance premiums.
A: Possibly. Filing any claim—even a small one—can indicate increased risk to insurers and may raise your premiums. Claims can stay on your CLUE report for up to seven years. Before filing, discuss with your insurance agent whether paying out of pocket might be more cost-effective.
This information is being provided for general informational purposes only. The Auto Club Group does not assume any liability in connection with providing this information.
