9 Factors That Jack Up the Cost of Home Insurance

Many of the unfortunate events that could impact our homes—from natural disasters to an electrical fire—are beyond our control. That’s why we purchase home insurance: to protect our loved ones and our property from unexpected loss and damage. Yet factors that affect the cost of insurance are (or could be) within our control. Homeowners can make their monthly payments more manageable, no matter the age or location of their home, by it taking steps to reduce risk. Read on to find out what you can do to bring down your homeowners insurance premiums.

The older your home, the more costly it is to insure. Older homes require more upkeep and are more susceptible to damage from flooding and storms. But age isn’t the only thing to consider. Home construction and materials are equally important and pose different risks. Brick, stone, and new aluminum siding are more resistant to fire and the elements. Wood, in contrast, is a greater liability and may cause rates to increase. Also consider the age and conditions of your roof, which is often a concern to insurers. Replacing or repairing a roof can reduce your home insurance premiums. While discounts vary depending on your policy, look for a 5 to 35 percent reduction for roof upgrades.

While home remodeling certainly adds value to your property, renovations like additions, a new kitchen, and other major improvements can also add dollars to your premium. Quality materials and luxury add-ons (such as a swimming pool) are pricier to replace or fix if damaged. And maybe think twice about putting up a trampoline. Trampolines and other such "attractive nuisances" incur a higher risk of injury, especially to kids, and can cause insurance rates to jump.

Live near a fire station? Lucky you! The cost of your home insurance may decrease by 4 percent. But if you live in a rural area, or if you're farther from the local fire department or hydrant, your fire protection rates may climb. The same goes for properties with wood-burning stoves and real fireplaces. Insurers view these luxuries—which homeowners in colder climates may consider necessities—as fire risks, and may increase your premium by 2 percent. To beat the heat (and the price hike), make sure your stove meets code requirements, and was installed by a licensed contractor. Also install smoke detectors throughout your house.

Beyond basic coverage, there are at least seven different types of homeowners insurance, and the rates are generally higher for more comprehensive plans. Some folks go with HO-2 coverage, the second to lowest level. These relatively cheap “broad form policies,” protect your property and valuables from 6 named perils including fire and lightning, freezing of household systems, and accidental damage caused by artificial electrical current. Most Americans (about 79 percent, as of 2017) go with HO-3 “special form” policies that cover all risks, except for excluded perils (like government action, flooding, and war). HO-5 “comprehensive form” policies offer, among other benefits, broader coverage for personal property. This level of coverage costs more and is best suited to high value single-family dwellings.