When it comes to determining the cost of homeowners insurance, the name of the game is risk. Insurance companies look at a ton of potential factors, from your location and credit history to your distance from a body of water, the breed of your dog, and what security features you have installed, to estimate the level of risk your home is exposed to—and the costs they might incur if they offer you a policy.

The two most important factors that determine your homeowners insurance rate are location and the cost to rebuild your home.

Location: The national average cost of homeowners insurance is $1,312 per year. However, if your home is in a city or state with high crime rates, frequent natural disasters or severe weather, and/or high average home prices, you’re likely to see a higher rate.

Cost to rebuild: The cost to rebuild your home following an insurance claim depends on its square footage, local construction costs, the number of rooms, and more. To quickly calculate the cost to rebuild your home, multiply the square footage by local construction costs by square foot.

These two factors make a big difference when it comes to home insurance costs. For example, the average cost to build a 2,300 square foot house in New York City is between $690,000 and $805,000 depending on the exact site and building materials you choose. In Miami, on the other hand, you could rebuild the same house for $253,000 to $529,000.

How does that impact home insurance rates? Well, the average annual cost of homeowners insurance in NYC is $2,146—while in Miami, it’s just $1,483.

Note that Miami’s average rate is above the national mean! That’s because Miami has a high crime rate and high risk index for natural disasters such as hurricanes. In neighboring Monroe County, where construction costs are similar, you might see lower rates based on lower crime and disaster risk.

But location and rebuilding costs aren’t the only things that determine your home insurance policy. Let’s take a look at some other important factors.

Factor	How it impacts your home insurance premium
Credit history	Some states allow insurance companies to look at your credit-based “insurance score,” which includes things like your payment history, debt, and credit history, to estimate your risk as a policyholder.
Coverage amount	Home insurance policies vary significantly in their level and amount of coverage. You’ll pay more for a more robust policy.
Deductible	The most common homeowners insurance deductible (i.e., the amount you’ll pay before insurance kicks in) is $1,000. Selecting a higher deductible could lower your premium, but your monthly payments go up with a deductible as low as $500.
Condition of home	The better the condition of your home, the lower the risk insurance companies see in it. In particular, a roof in poor condition can increase your premium significantly.
Age of home	Insurance companies offer discounts for new construction homes averaging 36%. For older homes, on the other hand, you’ll likely pay higher premiums.
Security and safety features	If you have a security system installed, or safety features like a smoke detector that contacts the fire department directly, you might be able to get a discount on your policy.
Marital status	Married people have statistically lower rates of home insurance claims, so companies see them as a lower risk and tend to assign them lower premiums.
Distance from water	Homeowners insurance won’t cover flood damage, but proximity to a body of water could still raise your rates due to the higher overall risk in the area.
Proximity to fire station	Fire and lightning damage make up 25% of home insurance claims, so the distance from your house to the nearest fire station may play a role in how much your policy costs.
Dog breed	Insurance companies assign risk levels to different breeds of dog, so your lovable companion could impact your premium. Rottweilers and pit bulls are among the breeds associated with high risks.
Choice of provider	Every insurance company uses a slightly different method to calculate premiums, and they’ll weight certain factors differently. That’s why comparing rates from as many companies as possible is important!

What’s not covered by home insurance?

While your homeowners insurance policy will cover specific named perils including fire, vandalism, and theft, there are some things that home insurance won’t cover—and it’s important to know what they are.

Typical perils not covered by home insurance include:

Earthquakes

Floods

War

Termite damage

Identity theft

If you live in an area that’s prone to earthquakes and flooding, you’ll likely need to purchase separate policies to cover those events. You can also buy additional coverage for personal property, particularly high-end valuables such as jewelry or art.

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