What affects my hazard insurance premium?


There are a number of factors that determine hazard insurance premiums. When you apply for a mortgage, the mortgage lender will require you to pay a maximum of 1 percent of your overall loan amount upfront in hazard insurance for a year. What determines this amount is the price of your home.

Factors Determining Hazard Insurance Premiums

  • As mentioned above, the value of your dwelling and its contents is a very significant factor which not only affects your mortgage payments but also your hazard insurance premium amount. The higher the cost of your home, the more expensive your hazard insurance premium.
  • Another very important factor is the type and amount of coverage you request. The more comprehensive the coverage and the higher the coverage limits, the higher the hazard insurance premium.
  • The location of your premises matters. Do you live in a state exposed to the risk of hurricanes, earthquakes, storms and floods? If you do, expect your hazard insurance premium to be higher than the national average which is about $800 a year. Home owners living in Louisiana, Florida, Texas, California and Mississippi as a rule pay some of the highest hazard insurance premiums. Insurers might even refuse to sell hazard insurance in areas with a rich loss claim history.
  • If your hazard policy contains a replacement cost provision, the premium will be higher than if your insurer paid claims on actual cash value basis.

Ways to Lower Hazard Insurance Premiums

There are a number of very useful money-saving strategies which can help reduce your hazard insurance premiums:

  • Install the necessary safety features - insurance providers tend to lower the premiums of those home owners who provide extra protection for their homes.
  • Set your deductible high (but make sure you will be able to pay it if a damage to your home occurs)! You can save up to 35 percent on hazard insurance premiums.
  • Take advantage of all available discounts if you are eligible for them.
Was this question and its answer useful?
Not a bit
  • Currently 4.2/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5
Very useful
Have a question about insurance? Ask the experts