Many homeowners fall into the trap of paying too much for too little insurance. Home insurance premiums vary depending on a variety of factors, and not knowing those factors can mean unexpected payments and even gaps in your coverage if you’re not properly insured. 
The cost of home insurance may be influenced by these factors:
Location
Of course, where you live has a heavy affect on your home insurance premiums. Different states charge different fees and premiums. But your zip code also matters. For example, you could be paying more for home insurance than someone in a different city as you, even if you live in the same state. This is because of a few factors: the cost of living, weather and crime rate.
If you live in an area that is frequently hit by floods or tornadoes, you could end up paying more for home insurance than homeowners who don’t live in these areas. This is because you will be charged more with how likely you are to file a claim. If you are considered high-risk and an insurer believes they will have to pay compensation on your policy, you may pay more for insurance.
The same applies to crime rate. Insurance provides who insure areas where theft and vandalism are high tend to charge more for home insurance.
Value of the Home
One of the biggest influences on your home insurance rates is the actual value of your home. Most lenders only require you to carry as much home insurance as you need to cover your mortgage. This doesn’t mean that you are excluded from the value of your home influencing your premiums, however. You also don’t always want to settle for the lowest possible coverage.
In general, it is recommended that you carry enough home insurance to cover the total replacement cost value of your home. This is how much it would cost to completely rebuild the home after a disaster, including building and material costs. This means that the higher replacement cost value of your home, the more coverage you need—and the more you will pay for insurance. Your premiums are calculated in part based on how much the insurer would have to compensate in case of a claim.
Coverage Limits
Tying back into the value of your home, it is also important to know how much coverage you are looking at purchasing. Higher coverage limits generally mean higher monthly premiums but choosing too little coverage can leave you without compensation when it comes time to file a claim.
This is especially important when it comes to personal belongings coverage. There are certain exclusions and limitations on your belongings when it comes to home insurance. Expensive items such as jewelry, furs, art and electronics have limited coverage under a basic home insurance policy. To compensate for this limitation, you may want to add policy floaters to your home insurance.
Deductible
Your home insurance deductible is how much you will have to meet after an accident in order to receive compensation for a home insurance claim. For example, if your personal belongings deductible is $500, you would have to pay $500 before receiving compensation for the rest of the damages or loss.
A higher deductible can save you money on monthly premiums, but it also means paying more out of pocket when you must file a claim.
Lifestyle
Believe it or not, your lifestyle can also affect your premium costs. This primarily ties into the general liability insurance available on your homeowners policy. Liability covers bodily injury and property damage you or a family member may cause to someone else, or accidents that may occur on your home’s property. If you host frequent parties, for example, you may pay more for home insurance due to the higher risk of a liability claim.
This type of insurance can also extend to damages and injuries caused by your children or pets. If one of your dogs bites someone, for example, liability insurance can help pay for the victim’s medical bills and protect you from a lawsuit. This is why certain dog breeds are also more expensive to insure, or otherwise excluded from home insurance coverage. Common exclusions and limitations for dog breeds include German shepherds, huskies, Dobermans and pit bulls.
Credit Score
Insurance providers see your credit score as a proof of how reliable you are. If you have a poor credit score, a potential insurer may worry that you will not pay your home insurance premiums in full or on time. Having low credit can raise your rates so that the insurer can compensate for the risk. In fact, some insurers may even deny homeowners with extremely poor credit. You can build credit by paying off loans and credit cards, however.