5 Factors That Determine Your Insurance Premiums

Wondering how you can get a lower insurance premium? It’s all about understanding how insurance is rated and how the quotes are developed. Insurance companies base your premiums on your risk factor, so knowing what your score is and what you can do to reduce your risk can make a difference. If you’d like to learn what components affect your insurance rates, then here are five factors that determine your premiums.

1. Your Personal Profile

Age

How old you are can heavily impact your risk profile. In most cases, if you’re under the age of 25 and over 65, your premiums will be higher. This is based on solid evidence that people in these age brackets pose a higher risk to insurance companies. This goes for auto insurance, home insurance, life insurance, and even travel insurance.

Health

Your overall health is also something the insurance provider will take into consideration when doing the underwriting for your policy. If you’re a smoker or have a condition or disease, you are likely to have a higher risk profile and will experience higher premiums in return (unfortunately). 

Credit Score

Your insurance payment history can play a significant role when you’re looking for car insurance and homeowner’s insurance. Having a history of missed insurance payments or owing money to insurance companies for previously cancelled for non-payment policies can hurt your chances of coverage and will likely cost you more than you hoped. Getting a hold of your credit score beforehand and finding ways to improve it may help cut down on your premiums.

Employment

If you have a dangerous job, it’s likely to impact your insurance premiums. For instance, if your job requires you to drive for a majority of the day, you pose a higher risk to auto insurers, and your premiums will reflect this. Insurers have built up a bank of knowledge about how particular professions behave. For instance, nurses often have lower auto premiums than professional athletes, because insurers view them as less likely to make an expensive claim. And when it comes to health insurance, people who are exposed to radiation or chemicals, or who have jobs with high injury rates, will experience higher premiums.

2. Details About Your Home, Vehicle, or Property

Insurers look closely at the item being insured. When it comes to your home, insurers look at the replacement cost – the amount of money to build the exact home as it stands now. If your home is still run down and using the materials it was built with in the 50’s, it’s likely to run a higher premium as it would be costlier to replace.

Vehicle ratings depend on crash-test performance, theft rates, repair costs, mileage, and how the car is used. A vehicle used daily for commuting carries a different risk profile than one used occasionally on weekends.

3. Where You Live or Keep Your Property

Location plays a large role in determining premiums. Homes located in areas with frequent flooding, heavy storms, or wildfires usually have higher insurance premiums than those in lower-risk regions. Neighbourhood crime trends also influence both home and auto premiums (the higher the crime rates, the higher the premiums). Proximity to fire services matters too; properties located far from fire hydrants or fire halls often carry higher rates because response times can affect claim severity.

4. How Your Coverage Is Structured

Coverage selections directly affect premium cost. If you choose coverage with higher limits, your insurer will carry more financial responsibility, which will be reflected in higher premiums. Deductibles work the opposite way: choosing a higher deductible usually reduces the premium because you’re taking on more of the risk.

Optional protections such as sewer backup, overland water coverage, or guaranteed replacement cost increase safety but also add to the premium. And the type of policy matters: actual cash value policies cost less but offer less protection, while replacement cost policies tend to be more comprehensive.

5. Claims History & Risk Behaviour

When it comes to premiums, your history matters. So if you’ve owned insurance in the past, your claims history will be looked at when applying for a new policy. When applying for life insurance, your family health history – whether your parent have had cancer or heart disease – will also fall under the microscope. And in the case of auto insurance, they’ll check to see how many tickets, point deductions, and at-fault crashes you may have had.

What You Can Control

While many rating factors sit outside your control, there are a few opportunities to lower your premiums:

• Keep your home updated. Updating your home’s roof, plumbing, or electrical systems reduces the likelihood of a claim and can help you secure lower pricing. Even minor improvements, like installing smoke detectors on every floor or replacing old sump pumps, can lower your premiums.

• Adjust your deductible. Choosing a higher deductible lowers your premium because you agree to take on more of the initial cost in the event of a claim. This approach works well for people who rarely make claims or who have enough savings to absorb the deductible without strain. It’s not the right fit for everyone, but it’s a reliable way to reduce monthly or annual costs.

• Bundle your policies. Most insurance companies offer lower premiums when you combine home and auto insurance under the same provider. The reason is simple: bundled customers tend to stay longer and make fewer claims.

• Maintain a clean driving record. Driving tickets, at-fault accidents, and careless driving convictions can negatively influence auto premiums for several years. Some insurers even offer special programs that track your driving habits through a telematics device and reward consistent, low-risk behaviour with lower premiums.

• Avoid small, frequent claims. Submitting several small claims in a short period can raise your premium more than one larger claim. If repairing something out of pocket is manageable, avoiding a minor claim may save more in the long run.

• Review your coverage regularly. It’s easy to end up over-insured or under-insured as life changes. Renovations, new purchases, job changes, and updated property values all affect your policy needs. Reviewing your coverage annually with a broker helps identify outdated information, unnecessary add-ons, and gaps that could cause issues later.

• Strengthen your credit where possible. For home and auto policies, a stronger credit profile often results in better pricing. Pay bills on time, don’t overspend, and regularly check your credit report for errors.

How Rowat Insurance Supports You

Understanding your risk profile can be difficult, especially when insurance companies assess risk in different ways. That’s why you need a professional insurance broker who can analyze your score and provide you with the best home, life, health, vehicle, or commercial insurance possible. At Rowat Insurance, we compare insurance quotes from a variety of providers, so that you get the most affordable rates for your needs. Contact us today to find out how we can assist you.