Factors That Affect Home Insurance Premiums
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Know the Factors That Affect Home Insurance Premiums

Investing in real estate in today’s time is a major decision, warranting careful consideration. Naturally, it makes sense to do everything in your power to protect such a significant investment, such as opting for a comprehensive home insurance plan. However, when selecting an insurance plan, you might wonder about what factors affect the cost of home insurance. Well, there are a number of factors affecting home insurance costs, and by understanding them, you can manage to get a good deal and comprehensive coverage for your home. Here, you will learn about the different home insurance rate influencers.

What Factors Affect Home Insurance?

As with any other insurance policy, there are many factors associated with home insurance costs. Some of the most prominent ones are mentioned below:

  1. Location:
    Geographical location of the home plays a crucial role in determining the insurance premium rates. If you purchase a home in an area that is prone to natural disasters, such as earthquakes or floods, the home insurance premium for that property may be high.
  2. Age and Construction of the Home:
    While doing the risk assessment, insurance providers also look at the home’s age and construction. Since older homes may have outdated systems, they are likely to have frequent issues, and consequently, home insurance premiums for such homes tend to be higher than those are relatively newly built properties.
  3. Safety and Security Features:
    If you want lower premium rates, you can consider installing protective devices such as burglar alarms, deadbolt locks, and smoke detectors. These measures, in addition to lowering insurance premiums, can help reduce the risk of theft or accidents and make your home relatively safe.
  4. Credit Score:
    Insurers commonly use credit scores to evaluate the risk associated with a policyholder. Maintaining a good credit score is generally associated with lower perceived risk, which may result in lower premium rates for insurance policies.
  5. Replacement Cost of the Home:
    The cost to rebuild your home from scratch in case of a total loss is known as the replacement cost; it is one of the biggest factors that affect home insurance premium rates. Homes with a high replacement cost usually have higher insurance premiums.
  6. Type and Amount of Coverage:
    Another home insurance cost influencing factor is the type and amount of coverage you seek. For example, if you opt for additional coverage, such as a rider for valuable personal belongings, it may increase the cost of your policy premium and vice versa.
  7. Claim History:
    If you have a history of frequent insurance claims, it can project an increased likelihood of you raising a future claim request. This can influence the decision-making process of insurance providers, leading them to charge you a higher policy premium.
  8. Deductible Amount:
    Deductible is the amount you pay out of your pocket for an insurance claim before the coverage kicks in. The higher the deductible amount you choose, the lower your premium will be, and vice versa. However, it is important to avoid choosing an extremely high deductible that you can’t afford in order to get a lower premium price.
  9. Distance Between a Fire Station and Your Home:
    The proximity of your home to a fire station influences the final policy premium rates. Homes that have relatively quick access to firefighting resources may get a low premium rate as the risk of damage due to fire for such homes is low.
  10. Pets:
    In certain scenarios, having a pet may affect your home insurance rates. However, disclosing information about your pets is crucial to maintaining the legitimacy of your claims.

How to Save on Home Insurance?

Now that you are aware of the different factors that affect home insurance premiums, here are some ways you can save bucks while selecting an insurance policy:

  • Bundle Policies: Bundling home insurance with other policies can get you a discount.
  • Raise Your Deductibles: As you now know, opting for a higher deductible can lower your premium rates, but you shouldn’t do this without evaluating your finances and ability to pay for any unexpected expenses that may come up.
  • Increase Home Security: Installing home security devices like smoke detectors may qualify you for discounts on your policy premium.

Secure Your Dream Home With Home Insurance Policy

At first, delving into research about factors that influence premium rates may seem daunting. Some people often choose to opt for the first option that makes sense for them. However, understanding the different types of policies, such as the Bharat Griha Raksha Policy, the factors that influence their rates, and the house insurance claim process is crucial before investing in home insurance.

Various factors, including the location of the home and your credit history, play a role in determining the policy premium. By implementing home security measures and learning about fire safety tips, you can lower your premium rates and safeguard your home. Additionally, bundling policies and maintaining a good credit score can ensure you get a good deal.


How can I get a discount on my home insurance?
Consider bundling policies, increasing deductibles (higher deductibles may result in reduced premiums), improving home security, and maintaining a solid credit score to get a discount on home insurance. Location, claim history, and other factors all have an impact on rates.

How does the location of my home affect the policy premium?
Homes located in an area prone to natural disasters or with a high crime rate may attract high policy premiums as there are high chances that you will raise a claim for your home.

What is the role of my credit score in my insurance premium rates?
Insurance providers analyse your credit score to assess the likelihood of claims. Thus, maintaining a good credit score may decrease policy premiums.

Do I need to update my home insurance coverage?
Yes. Regularly reviewing and updating your coverage to reflect the changes in the value of your home is important to stay financially protected and avoid paying for unnecessary extra riders.

Should I opt for a higher deductible to get a low premium price?
This depends on your finances. If you have sufficient funds to back up your expenses till the insurance cover kicks in, you can consider choosing a high deductible and get a low policy premium.

Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.

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