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Factors that Affect Your Home Premium


Companies use a process called “underwriting” to decide whether to sell you a policy and what rate to charge you. Each company must file its underwriting guidelines with TDI and update them each time they make a change. The criteria companies typically use to establish premiums include:

  • Age and condition of your home. Older homes and homes in poor condition are generally more expensive to insure. Companies may refuse to insure homes in poor condition, but they can’t deny coverage solely because of a home’s age or value.
  • Your home’s replacement cost. Since your policy will pay to rebuild your home if it is destroyed by a covered loss, premiums are more expensive for homes with a high replacement cost.
  • Construction materials used in your home. Homes built primarily of brick are less expensive to insure than frame homes.
  • Where you live. Premiums will likely be higher for homes in areas with a high frequency of storms, such as tornados or hailstorms, or with a high incidence of theft.
  • Availability of local fire protection. Homes with access to good fire protection services get better rates. If you live in an area with limited fire protection, your rates will be higher.
  • Your claims history. Companies will charge more if you’ve filed claims in the past. Before filing a claim, it’s a good idea to ask your agent or the company’s underwriting department how it will affect your premium at renewal time. For less expensive losses, it may be cheaper in the long run to pay for repairs yourself rather than file a claim. This is especially true for repairs that wouldn’t cost much more than the amount of your deductible.
  • Your credit score. Companies may consider your credit score when deciding whether to sell you a policy and what to charge you. However, a company cannot refuse to sell you a policy or cancel or non-renew your policy solely on the basis of your credit. Companies that use credit scoring must file their models with TDI. Learn more about how companies use credit scoring on HelpInsure.com.