Your Home Insurance Rate

Everybody hates paying insurance premiums, mostly because people feel insurance costs are too high and they aren't really getting anything in return. That is, until they have a theft, fire or other insurance issue. Then suddenly those premiums they've been paying can seem like the best investment ever made.

Still, we all want to get the best deal possible on our home insurance policy. And there is, in fact, a lot you can do to lower your premiums. Insurance companies determine your rates based on how much risk they believe you present. If they see you as likely to make claims more often, then your premiums will be higher than if they view you as a lower risk client.

Major Factors that Affect Home Insurance Rates

There are three major factors that affect home insurance rates: location, number and type of claims and credit rating. The degree in which you can control one or more of those factors will play a role in how much you can lower your own home insurance rates.


Although homeowners insurance rates are on the rise nationwide, people living in coastal areas, areas prone to natural disasters and wildfires think California), and areas with high crime rates are paying even higher rates. While there is little you can do to control external environmental factors if you live in one a high-risk area, living close to a fire or police station can help lower your premiums.

Number and type of claims

Many people fear that filing home insurance claims can cause them to be "blackballed" by insurance companies, resulting in higher premiums, loss of coverage and difficulties obtaining new insurance. While there is some truth to that notion, it often has more to do with the type of claims filed rather than the number although filing too many claims in a specified time period can boost rates--but more about that later).

Believe it or not, home insurance claims related to weather or catastrophes do not necessarily result in a boost to your premiums. In fact, according to CLUE which stands for Claim Loss Underwriting Exchange operated by Georgia-based ChoicePoint and is considered the industry standard for insurance claim reports) the three most common insurance claims that are more likely to trigger an increase in premiums include:

  1. Dog Bites
  2. Water Damage
  3. Slip and Fall Claims

Dog Bites -- Sorry, Rover, but dog bites are the largest single cause of home policy claims.
Many insurance companies keep a list of dog breeds most likely to attack, based on Centers for Disease Control and Prevention statistics. If the homeowner owns that particular breed, it may be difficult to even obtain insurance.

A single attack is often likely to result in higher premiums. However, homeowners may be able to keep their insurance rates from escalating by remedying the situation to the insurance company's satisfaction.

This may involve getting rid of the dog, or taking the dog to a "psychologist" or animal trainer. Sometimes, the homeowner's rates will then depend upon passing a probationary period, such as six months without an attack.

Water Damage -- Water damage tends to set up a barrage of red flags for insurance companies, largely because of the costs of eliminating mold. The biggest controversy over CLUE reports has been over water damage and its effect on real estate sales.

Homebuyers cannot obtain CLUE reports on homes they are considering purchasing. However, the homebuyer's insurance company can obtain the report in deciding whether to insure the home.

Plumbing problems that cause damage inside a property also can be red flags to insurance companies, particularly if the repairs -- or lack thereof -- result in another, similar claim. In that case, you might be better off solving the water damage issues yourself, especially if the damage is minor and involves broken pipes or leaks in window wells, walls and seams.

Slip-and-Fall Claims -- A slip-and-fall injury is a generic term used to describe an injury that happens when someone trips, slips or falls as a result of a hazardous or dangerous condition on someone's property. Slip-and-fall injuries, according to the National Safety Council, are the single largest cause of emergency room visits. If someone hurts themselves on your property and files a claim with their insurance company, your rates may rise.

So, when should you file a claim?

Typically, there are no general guidelines for filing a claim. Filing a single claim for homeowners insurance generally will not result in higher rates. However, making two or more claims in a three-year period is more likely to trigger a hike, although each company is different. Many companies base their decisions on how long you've been with the company and the nature of the claims.

A general rule of thumb is to avoid filing small or petty claims. And avoid filing a claim for maintenance-related damages such as a chronic water leak if at all possible -- even one such claim could cause your insurance rates to rise or even be dropped by your insurer. It's best to keep your home in good shape, making repairs and replacing major components as needed to avoid big expenses as well as minor home insurance claims.

Credit Rating

As you might imagine, having a good credit history can help lower your insurance rates -- particularly when you are first shopping for an insurance company. Insurance companies see a good credit history as both a sign of responsibility and stability staying with one bank or credit company), and they are more likely to offer discounts based on that.In the end, homeowners insurance is there to give you peace of mind and to restore damaged property. But understanding when to make a claim as well as how to control aspects of insurance costs can save you both headaches and money in the long run.

Learn how easy and convenient shopping for home insurance can be. Get your free home insurance quotes today!