Five Reasons Why Your Insurance Bill is so High

Do you hate writing out that home insurance check every month? We know – it’s not a fun feeling.

But, do you know why you’re paying so much to protect your home? More importantly, have you considered the different ways you could reduce your home insurance rate?

The factors that contribute to what you pay for your home insurance are all over the map. 

Some factors may surprise you (trampoline, anyone?) while others are fairly obvious. And while some factors may be out of your control, others are definitely within your control – and thus, allow you to play a big part in the cost your policy.

Want to know what factors contribute to the price of your home insurance policy? Here are five…

#1 – Home’s Age and Construction Type

When you bought your home or condo, you probably peppered the realtor with all kinds of questions: When was it built? What materials were used? How many bedrooms? What’s the square footage? What kind of flooring and windows does it have? How about the roofing?

Insurance companies ask the same kinds of questions and they’ll use the answers to determine the price of your home insurance policy, according to Jim Whittle, assistant general counsel and chief claims counsel at the American Insurance Association (AIA). 

The Insurance Information Institute (III) also notes the condition of your home’s plumbing, heating and electrical system as factors that determine your rate. 

Whittle recommends working with insurance companies to craft the kind of coverage you want and personalize it to meet your home’s needs.

“You might say, okay, I’ve got an older house, but I’m willing to accept more risk personally,” Whittle explains. “So I’m going to have a higher deductible and, as a result, you’ll pay a lower premium.”

#2 – Home’s Vulnerability to Criminal Activity

If you live in a high-crime area that’s more prone to theft, this may concern your home insurance company and cause your premiums to go up, Whittle says.

That’s because the more crime there is in your neighborhood, the more at risk you and your home are, and as a result, there’s a higher likelihood you’ll file a claim due to theft. As you can probably imagine, insurers don’t like those chances.

And while the criminal activity in your neighborhood may be out of your control, there are steps you can take to alleviate some of the concern your home insurance company may have.

For starters, the III notes that “Most insurance companies provide 2 percent to 15 percent discounts for devices that make a home safer – dead-bolt locks, window grates, bars and smoke/fire/burglar alarms.”

Of course, discounts will vary depending on your insurer, so you’ll want to do some research to find out what type of security devices your home insurance company offers discounts for.

#3 – Firefighting Response Time

As strange as this may sound, the distance between your home and a fire station is a factor that insurers mull over when figuring out your home insurance rate.

“The proximity of your home to a fire hydrant (or other source of water) and to a fire station, whether your community has a professional or volunteer fire service and other factors that can affect the time it takes to put out fires,” are all considered when determining how much you’ll be charged on insurance, according to the III.

This factor also ties together with the materials used to construct your home, since some are more fire-resistant than others.

“In wildfire areas, brick beats cedar,” Whittle says. 

Looking for ways to get a red-hot, fire-related discount?

“You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm, or dead-bolt locks,” according to the III. “Some companies may cut your premiums by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations.”

#4 – Your Credit Score

Your credit score, as you may know, is a three-digit number that essentially predicts the likelihood of you paying your bills. The higher your number, the better your reputation among financial companies.

“As allowed by law, many insurance companies use a credit-based ‘insurance score’ when evaluating insurance applications or policies,” writes the American Insurance Association in its report on credit-based insurance scores. 

It adds that “The way you handle your credit says a lot about how responsible you are. Insurance companies want to reward responsible people by making sure you don’t pay more than you should. That’s why insurance scores are so useful.”

If you talk to your insurer and find out that a poor credit score is what’s causing you to have such a high bill, Whittle recommends shopping around because not every company uses your credit score when calculating risk.

#5 – Your Dog’s Breed

Thinking about getting a family pooch? It could affect what you pay for homeowner’s insurance.

“Your dog’s breed could affect your premium since some studies have demonstrated that certain breeds are more susceptible to biting than others,” Whittle says.

“You have to remember: homeowner’s policies don’t only cover repairing the home,” Whittle says. “You’re also paying for liability insurance in the event that someone gets hurt on your property.”

These injuries could include dog bites, which accounted for more than one-third of all homeowners insurance liability claims paid out in 2012, costing nearly $489 million, according to the III.

Based on this statistic, it’s not a surprise that insurers view dog owners as a risk.

However, as Whittle mentioned, the affect your dog has on your home insurance premium will depend on how aggressive your dog’s breed is. For example, the III adds that some insurers may charge more for homeowners who have pit bulls or Rottweilers.

Contact our Personal Lines Department today at (845) 246-7134


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