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What does risk mean for home insurance?

Suburban High Ranch Home in Residential Neighborhood

When looking for any time of insurance policy, you may come across a reference to your “risk.” When it comes to home insurance, your risk generally refers to how much risk you present to the insurer. 

How is Risk Calculated in Home Insurance? 

Your risk is what affect the cost of your home insurance, as insurance providers will try to offset their risk with higher premiums. The more likely you are to file a claim and cost the insurance provider money, the higher your risk may be. 

Factors that can influence your risk level include: 

Credit Score 

Insurance providers view your credit score as an example of how reliable you will be in paying your home insurance premiums on time and in full. Homeowners with a low credit score will often face higher home insurance premiums. You can build your credit score by paying off debts and loans. 


Different locations present different risks to homeowners and insurers alike. If your state or city often faces bad weather, you could see a rise in your insurance rates due to the frequency of claims around you related to storms and other incidents. A high crime rate in your area can also cause higher premiums, as you are more at risk for being a victim of theft or vandalism. 

Another factor with location is your proximity to a fire station. Living close to a fire station can lower the response times, thus lowering your risk of severe damages due to a fire. On the other hand, living far from a fire station can increase your risk by expanding the response time. 


Believe it or not, your lifestyle can actually affect your risk as a homeowner. Do you frequently host parties or friends? Do you own expensive items such as jewelry, furs and art? Do you have a pool or trampoline? Any of these can raise your risk as a homeowner in the eyes of your insurer. Having people over or hosting parties can increase your risk of liability claims concerning guests being injured or their property being damaged at your home. Trampolines and pools can increase the risk of severe injury, as well. 

If you are not sure about your risk level, be sure to ask your insurance agent. The lower your risk of filing a claim, the lower you may pay for home insurance. 

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