Home insurance premiums vary depending on several different factors that all boil down to one factor: your risk. The more risk you present for the insurance provider, the more they may charge you for home insurance.
So how is risk calculated for your home insurance?
Value of the Home 
The value of your home is perhaps the main key to your home insurance—based on how much you need and how much you will pay. The higher your home’s value is, the more you will pay for home insurance. This is because a more expensive home will cost the insurance provider more to repair or rebuild after a claim, so they charge more in insurance to cover their potential losses.
The value of your home isn’t always what you think, however. Your home insurance is calculated based on your home’s total replacement cost value which is not the same as your home’s market value. Instead, the total replacement cost value of your home is how much it would cost to completely rebuild after a disaster including building and material costs.
If the value of your home changes, it is important to notify your insurance provider as your insurance coverage will need to be adjusted. Not adjusting your policy after an update or upgrade to your home could leave gaps in your coverage when it comes time to filing a claim.
Location
Your location influences the cost of your home insurance for various reasons. One reason is the crime rate in your area. A higher crime rate results in a higher risk of theft or vandalism, which can raise your rates. Another factor is the history of claims or natural disasters in your area. The more disasters you face, the more likely you are to need to file a claim in the future.
Consider these factors carefully when moving and searching for a home insurance policy. You can reduce some of these factors’ influence by protecting your home with anti-burglary systems and weather resistant upgrades.
Credit Score
Insurance providers consider your credit score an example of how reliable you will be as a client in paying your premiums in full and on time. A low credit score can cause your rates to go up as the insurance provider tries to offset the potential risk of insuring you. You can build your credit score by paying off debts and loans and setting up an automatic draft for your bills so that you don’t accidentally miss a payment.
Coverage Limits
Obviously, the more home insurance you have, the more you may pay in monthly premiums. This doesn’t mean you should cut down on coverage just to save money, however. Having less coverage could save you money, but it also means leaving gaps in your coverage and leaving you to pay more out of pocket after a claim. Speak with your insurance agent about how much insurance you want for your home. In general, you should carry at least 80% of your home’s total replacement cost value in home insurance, although 100% is recommended.
Deductible
Similarly, the deductible you choose for your home insurance policy can also influence your rates. By choosing a higher deductible, you can save money on monthly insurance premiums. However, this means paying more out of pocket when it comes time to filing a claim. For example, if you choose a $1,000 deductible over a $500, you could face lower insurance rates than you would with a $500 deductible, but you will also be expected to pay $1,000 toward a claim after an accident.
Claims History
Your personal claims history can also raise your insurance rates. If you have a history of claims on your home insurance policy, you could see an almost instant raise in your home insurance rates. When accidents occur, speak with your insurance agent. This does not necessarily mean that you need to file a claim, as you should have the damages evaluated by an expert. If the cost of the damages are lower than your deductible, you may want to pay for the damages out of pocket rather than filing a claim.
If you have any questions about your car insurance policy or how much you are paying for coverage, speak with your insurance agent. They can help you calculate your home’s needed insurance coverage and help you find discounts to save money.