What affects homeowners insurance premiums?

What affects homeowners insurance premiums?

Update: If you are a Washington state driver, please note the emergency rule banning the usage of credit scoring: Credit Scoring Ban.

Similar to how banks use various elements to determine credit worthiness of a borrower and interest rate of a loan, insurance companies utilize several factors to determine insurance premium for a customer’s policy. 

In this article, we will go over the factors that affect the price of homeowners insurance premium.

There are four main categories of factors

Location of Your Home

Personal Information

Insurance Options

Characteristics of Your Home

Location of Your Home

Zip Code

Insurance companies use data from various sources including their own claims record history to evaluate risk levels for each zip code. Areas with consistently higher number of claims are more likely to have higher insurance premium. 

Wildfire Zone

If your home is located in an area prone to wildfires, your insurance premium may increase to reflect that level of exposure. 

Fire Protection

Your home’s access and proximity to nearby fire stations will also have an impact to your homeowners insurance premium. Being closer to a fully staffed and adequately equipped fire station allows a higher chance of mitigating further damages to your home in case of fire, and it also lowers the potential cost to repair or even rebuild your home. 

Personal Information

Insurance Score

It is a metric that insurance companies use to assess individual insurance risk based on the consumer report of a customer and the spouse. Each insurance company uses its own formulas to evaluate a consumer report and generate an insurance score. You may request a copy of the consumer report from your insurance agent.

Credit History

Credit history is one of the metrics used by insurance companies to assess your insurance risk. However, most insurance companies do not consider credit score itself as a rating factor.

Marital Status

In general, a married couple has a lower rate than non-married individuals.

Characteristics of Your Home

Replacement Cost

It is the estimated cost to repair or rebuild your home based on several characteristics of your home, such as roof composition, floor covering, and etc. More information: Home Replacement Cost.

Home System Upgrades

If you have upgrades such as a monitoring security system and fire sprinklers installed on your property, you may qualify for savings with your insurance company.

Insurance Options


Depending on your choice of coverage limits on your dwelling, other structures, and other available coverage options such as liability coverage, your insurance premium will adjust accordingly. The higher the coverage, the higher your insurance premium will be, and vice-versa.


The amount you choose as your deductible, which is your out-of-pocket expense after a claim, will reflect in the cost of your premium. Your insurance policy may have different deductible options for different coverages. Rule of thumb: the higher the deductible you choose, the lower your premium will be, and vice-versa.

Claim History

Insurance companies will always evaluate your history of claim records to assess the probability of future claims. If there has been a high frequency of claims in your past, the insurance premium will likely be higher to reflect a greater chance of future claims.

Prior Insurance History

The presence of prior property insurance will always result in a more favorable rating on a homeowners policy. Certain insurance companies may even require their new customers to have a minimum length of continuous prior insurance to qualify.
Every insurance company has its own guidelines for policies. We always recommend talking to your own agent to discuss your personal policies in detail. Working with a personal agent is the best way to make sure you have the right coverages that fit your individual needs.
How Can We Help?

AYAO Insurance
12700 NE 124th St #9
Kirkland, WA 98034

Alice Yao
WAOIC #716776