How Property Insurance Is Calculated

< Back to main article list

A look at factors that affect your insurance rate

Several factors are taken into account to calculate your property insurance rate. Some apply only to homeowners, but others are a factor whether you own a home or condo, or rent a place.

  • Insurance companies consider these factors to estimate the likelihood that you – or others in similar circumstances – will make a claim, and what that claim will cost.

These are some of the main things that will affect the cost of your property insurance.

Location, location
Fire hydrant/fire station proximity
Amount and types of coverage
Amount of your deductible
Security features
Other factors for homeowners
Replacement cost
Heating
Electricity
Pipes
Wood stove
Roofs
Other considerations

Location, location

Fire hydrant/fire station proximity

Amount and types of coverage

Amount of your deductible

Security features

Other factors for homeowners

If you own a home, these are some of the other variables that may affect what it will cost to insure your property.
 

Replacement cost

Heating

Electricity

A variety of factors associated with your electrical system can affect the risk of fire and, with it, the cost of insuring your property.

  • Breakers pose less of a risk than fuses.
  • If the flow of electricity into your home is less than 100-amps, it increases the risk of overloading and fire.
  • Older types of wiring can also raise the level of risk, particularly if the wiringhas deteriorated.
     

Pipes

Wood stove

Roofs

Other considerations

How you use your home, as well as some structural features, can also affect your insurance cost. Here are a few examples:

  • If you build or plan to build a rental unit into your home
  • If you decide to operate a business from home
  • If you make any other major changes to the structure or how it is used.
  • If you have other structures on your property (a swimming pool, pool house, guest house or storage shed) that are worth more than 10% of the total insured value of your home.


Finally, here are a couple of things that normally do not affect the cost of your property insurance:

  • The type of appliances (gas or electric) typically does not affect the cost of your home insurance

The exterior (brick or aluminum siding) is usually not a factor in calculating premiums, however, it is a factor when calculating the building replacement cost (i.e., the cost to rebuild with materials of like kind and quality, if the building were destroyed).