How Your Home Insurance Rate is Determined

These are some of the common elements insurers look at when calculating your home insurance cost.

Rebuilding cost of your home

If your house were totally destroyed, this is the amount it would take to get it back to its former condition. The rebuilding cost is often different than the purchase price of your home because it includes factors like rising or falling construction costs in the area and debris removal, which you might need after a major storm, fire, etc.

Included in the estimated cost of rebuilding — aside from the building costs themselves — are labor costs and accessibility of the property (for instance, it would cost more to rebuild on a steep hill than on flat ground). Talk with your insurer for help estimating the true rebuilding cost of your abode.

Materials that make up your home

Your home's bones make a difference. Houses built from brick, stone, stucco (non-artificial), and other hard, dry substances can often get a lower rate than homes made of wood, which is softer and more flammable.

Age of your home

Older houses sometimes have inferior or degrading materials that are likely to cause issues. Or, in some cases, they contain unique architectural features that are costly to replace. That's why recent homes tend to have lower premiums.

Fire protection in your area

Your area's fire protection rating — how far you are from a water source and distance to a responding fire department — matters when a fire breaks out in your home, and it can affect how much you pay for coverage.

Claims history in your area

Neighborhoods that regularly get hit with things like tornadoes or burglaries might have higher home insurance rates.

Your personal claims history

If you've established a pattern of home mishaps and claims, your insurer might want a higher premium to account for it. On the other hand, if you've been a responsible homeowner for years, your insurer will often reward you with a lower rate.

Additionally, if you have homeowners insurance from Esurance, you'll get 5 percent of your premium back for being claim-free for one year. And even if you have a subsequent claim down the road, you still get to keep that Claim-Free discount.

Your pets

Dogs make a cozy addition to the foot of your bed, but depending on their breed, might attract a higher insurance rate. Certain breeds such as Pit Bull and Rottweiler are sometimes considered uninsurable altogether.

Your coverages

Of course, this is a big factor in how insurance rates are determined in general. The more protection you need, the higher your premium tends to be.

Your history with your insurance company

Your home is more likely to suffer a loss as it ages, so your premium is also likely to increase commensurately with the risk. But insurers love their loyal customers — and they'll go out of their way to get you the best deal possible.

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