10 Factors That Can Affect Your Homeowner’s Insurance Premium

What Is a Home Insurance Premium?

A home insurance premium is simply the amount of money you must pay each month or year in order to keep your home insurance—basically, it’s the cost of home insurance!

How Home Insurance Premiums Are Calculated

Home insurance premiums are calculated by adjusters based on a number of different factors. No two home insurance policies are exactly the same, so it’s almost impossible to compare premiums with friends or family to see if you’re getting a good deal; that’s one of the reasons insurance brokers, who compare policies on your behalf, are so useful! 

10 Factors That Can Affect Your Premium

There are more than ten factors that could affect your home insurance premium; those listed below are just some of the many factors that could affect your premium. They were chosen to give you a better understanding of how many things are considered when setting a premium.  

1. Replacement Cost of Your Home

This is perhaps the most important factor—how much your home is insured for. Generally, home insurance policies work on a replacement cost basis; that’s the cost to rebuild your home from the ground up in the case of complete destruction. The more valuable your home is, the more the insurance company may have to pay out—and the more your premium will be. 

2. Your Insurance Deductible

Your deductible is an amount of money your insurance company will not pay out if you make a claim. This means policies with higher deductibles are less likely to make claims and that those claims will cost the insurance company less when they pay out. A higher deductible means lower premiums. 

3. Having a Mortgage

Home insurance companies will rarely, if ever, increase your premiums based on the terms of your mortgage. When you’re mortgage-free, however, it’s a strong indicator of fiscal responsibility, which some insurance companies translate to general responsibility. As such, some insurance companies offer a mortgage-free discount. 


4. Your Home’s Location

Location is one of the biggest factors in determining your risk of vandalism, arson, robbery, and other hazards. Homes in areas prone to natural disasters will generally have higher premiums, just like homes in high-crime areas. 

5. Possessing a Wood-Burning Stove

Wood-burning stoves are dangerous compared to modern stoves and furnaces—having one will generally increase your premiums. They’re also worse for your health, so if possible, it’s best to replace them. 

6. Your Home’s Age and Condition

A brand-new home built with high-quality materials will cost less to insure than an old home with knob-and-tube wiring. Depending on your home’s age and condition, it may even be uninsurable; these are two of the most important factors in determining your premium. 

7. Remodelling and Renovation Work

Remodelling and renovations can increase the value of your home, which, in turn, increases your insurance premium. Let your insurance company know about any renovations you’re conducting, and consider builder’s risk insurance for any large-scale remodelling or renovation projects. 

8. Pools, Hot Tubs, and Swim Spas

Pools and similar water features will increase your premium because the risk of water damage to your home goes up. Make sure you have sufficient coverage for water damage if you’ve got a pool! 

9. Your Marital Status

Statistically, married couples are less likely to make claims than people who are single. Want to decrease your home insurance premium? Get married! (Note: We don’t encourage anyone to get married for the sole purpose of decreasing their home insurance premium). 

10. Your Claims History

Claiming can increase your home insurance premium, while having a claims-free history can actually net you a substantial discount. 


By understanding the factors that affect your home insurance premiums, you can make modifications to lower them. As we mentioned at the top, these are just a few examples: an insurance broker in Winnipeg can help you find ways to lower your premiums!

Ken Coughlin

About the Author

Ken Coughlin


Experienced Chief Executive Officer with a demonstrated history of working in the insurance industry. Strong business development professional skilled in Negotiation, Budgeting, Business Planning, Operations Management, and Property & Casualty Insurance.

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