Homeowners insurance is a necessary evil that most people can’t live without. According to insurance.com, the average homeowner in 2025 pays $2,601 a year for their insurance.
But how do insurance underwriters determine how much you will pay? There are numerous factors that go into establishing your premium.
Where Your House Is Located
Your state and your ZIP code are factors when determining your insurance rate. For example, according to insurance.com, Oklahoma had the highest homeowner’s insurance rates in 2025. The average rate in Oklahoma for a $300,000 home is $5,858 per year. The main reason is the abundance of storms with severe property losses.
Hawaii has the lowest homeowners’ insurance rates at an average of $613 per year for a $300,000 home.
Replacement Cost of Your House
Replacement cost isn’t the same as your home’s market value. Insurance replacement cost is based on the rebuilding cost of your home and, therefore, the amount of dwelling coverage you’ll need.
In other words, the higher the replacement cost purchased, the higher the premium.
Your Policy Deductible
Your deductible is the amount of out-of-pocket expenses you’re responsible for before the insurance company pays.
The higher your deductible, the lower your premium. For example, according to insurance.com, you can trim $512 off an annual rate by raising a $500 deductible to a $2,500 deductible.
But remember, you’ll need to have the reserves to pay the difference at the time of a loss.
Dog’s Breed Matters
A high-risk dog breed could impact your homeowners’ premium. That’s because insurance companies categorize these dogs as “dangerous.”
According to Insurance Information Institute, in 2024, the average cost per dog bite claim increased 18.3 percent, to $69,272 from $58,545 in 2023. California leads the nation in dog bites, with their 2024 average claim payout hitting $86,229.
According to Policygenius, here are some dogs that are considered high-risk and are often excluded from homeowners insurance:
- Akitas
- Alaskan malamutes
- Any wolf breeds
- Chow chows
- German shepherds
- Great Danes
- Pit bulls
- Presa Canarios
- Siberian huskies
- Staffordshire terriers
Typically, muscular dogs with thick chests are most commonly excluded, including wolf breeds. But there are insurance companies that will insure these if yours doesn’t have a bite history. But it will adversely affect your premium.
Underwriter Rating Tiers
Based on underwriting guidelines, insurers assign homeowners to rating “tiers” with others who have similar characteristics. Some insurers use “multi-tier” rating programs. That’s when one rate level is established for homeowners within the same company.
At the end of a three-year policy period, you may be reevaluated to determine if you qualify to move to a different tier.
Claims History
You have insurance to pay claims, but if you have what the company deems as too many, it could affect your premium.
A history of frequent claims like theft, water damage, and dog bites is seen as a red flag to an insurance underwriter.
But even if you don’t have any claims, you can still have an increase due to other people’s claims.
Over time, insurance companies may also track the number of claims filed in your geographic area. For example, premiums are higher in disaster-prone areas. Your insurer could raise rates across the board if it sees an upswing in catastrophic claims in your state.
But many states limit how much an insurer can increase rates.
Increased Coverage Will Increase Premium
The more robust your coverage, the higher your premium. For example, you may want to increase your liability or personal property limits.
Because the dwelling is based on replacement costs, you might want to add an inflation guard coverage to protect yourself against increased rebuilding costs.
But the bottom line is, whatever you add will also add to your premium.
An ‘Attractive Nuisance’
A swimming pool or trampoline is known as an “attractive nuisance.”
According to the Centers for Disease Control and Prevention, in the United States, more children ages one to four die from drowning than from any other cause of death.
When you have a pool on your property, it increases your risks and may necessitate higher liability protection limits.
Besides the cost of higher liability coverage, there’s the cost of replacing the pool. In-ground pools are typically considered other unattached structures in homeowners insurance coverage. Other structures usually max out at ten percent of your dwelling coverage limit, according to Allstate. So if you have $400,000 on a dwelling, your in-ground pool would be insured for roughly $40,000.
If you have other unattached structures on your property, it’s important to ensure you have enough coverage.
Condition of Your Roof
The insurance company sees a newer roof as more likely to protect your home from the elements. For that reason, they will provide discounts for new roofs.
But if your roof is in condition, or is over 10–15 years old, you’re likely to see a policy increase in the form of a surcharge, according to Policygenius.
Many Factors Determine Premium
When it comes to your homeowners’ premium, you have some control. You can choose a lower-risk dog or have your roof replaced. But some circumstances are outside your control.
Take the time to evaluate your homeowners’ policy with your agent and ensure you’re receiving the proper discounts to help lower your premium.
The Epoch Times copyright © 2025. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
