What Affects Your Home Premium Insurance companies consider many factors when setting premiums. Here are some factors your agent or insurer may consider. Replacement Cost The cost to rebuild your home is not the same as the purchase price (which includes the cost of the land). Your insurance agent may help you estimate the replacement cost using information about your home and its contents. Construction Premiums are usually lower for homes that are primarily brick or masonry and higher for wood frame homes because they are subject to more extensive damage in the event of a fire. Earthquake insurance, sold separately from your home insurance policy, is much more expensive for brick homes than frame houses because brick houses are more susceptible to extensive damage from earthquakes. Structures and Features Certain home features, such as swimming pools, trampolines, or playscapes, are identified as risks that could cause injuries. Age of Your Home Some insurers may be unwilling to insure older homes or may offer limited coverage. You may qualify for a discount if you have a new home. Fire Protection The quality of your fire department and the distance between your home and a fire hydrant determine the fire protection class of your home, which affects your policy's premium. Having a wood furnace or wood stove can be a fire risk and may cause insurers to increase your premium or limit the coverage they are willing to provide. Claims History The claims history of your home and of homes in your area may be considered. Credit Information or Insurance Score You may be asked to provide information regarding any bankruptcy, judgments, or credit problems. The insurer may also ask your permission to obtain a credit report or will disclose to you that an 'insurance score' will be used to complete the premium quote. An insurance score is a number defined by each insurer that is based on information regarding your credit history. Alaska law allows insurers to consider credit information in the selection of applicants and setting of rates. AS 21.36.460 sets limits on what credit information may be used, what consideration it may be given, and how often it may be considered. To obtain your credit history, your insurer may ask for your date of birth, social security number, and current or prior address. Use of Credit History or Insurance Score Insurance Score Models (pdf) What Alaskans Need to Know About Credit Use (pdf) Deductibles A deductible is the portion of a loss you agree to pay. Deductibles can be stated as a dollar amount or as a percentage of the dwelling limit. For example, a 1% deductible on a policy with a $250,000 dwelling limit means you would be responsible for the first $2,500 of a loss to the dwelling. Generally, your deductible applies to the coverage you have for your personal property (known as contents coverage) and your home, but not your liability coverage. Deductibles reduce your premiums because you agree to pay a part of each claim that your insurer would otherwise have to pay. Insurers offer deductibles because they reduce the number of small, covered claims that are costly for insurers to handle. The higher the deductible you choose, the lower your cost will be. For example, a policy with a $1,000 deductible will cost more than one with a $2000 deductible. Determine how much you can reasonably afford to pay out of pocket if a loss occurs. Insurers may offer different deductibles - you may need to shop around to find an insurer who is willing to offer a deductible that suits your needs. Discounts Discounts are applied because properties with certain characteristics have demonstrated lower frequency or severity of losses. Before purchasing home insurance, learn about the discounts your insurer may offer. Here are some common discounts to look for. Deadbolt Locks or Safety Alarms Insurers frequently offer a discount if you have deadbolt locks, fire alarms, or burglar alarms in your home. Fire-Resistant Materials A home constructed of fire-resistant materials is at reduced risk of a significant fire loss and may qualify you for a discount. Multi-Policy If you buy your auto, home, and umbrella insurance policies from the same insurer, you may qualify for a discount. Check with your producer if applicable. Senior Citizen If you are retired, you may qualify for a discount. Non-Smokers Some insurers offer non-smokers a discount.