How Insurers Evaluate Risk

Insurers don’t guess your premium—they calculate it with a detailed risk scoring system. Every part of your home, your location, and your personal history gets factored in. The higher the risk, the higher the premium—or the more likely you get denied entirely. This guide shows you exactly what they look at so you can understand why your price is what it is.

If you want to see how all these factors convert into actual pricing, skim how premiums are calculated. This article explains the inputs; that one shows the math.

1. Roof Age and Condition

Roofs are the number one risk item insurers judge. Old, worn, or brittle roofs mean water intrusion, storm claims, and expensive payouts.

• 10–15 years old → higher risk
• 15–20 years old → likelihood of ACV roof coverage
• 20+ years → possible refusal to insure

If you want a deeper look at this factor, see roof age and insurance impact.

2. Location and Geographic Hazards

Where your home sits matters as much as the home itself. Insurers weigh your ZIP code heavily.

• Wildfire zones
• Hail corridors
• Hurricane-prone coasts
• Floodplains
• High-crime neighborhoods

Even if your house has never been damaged, location risk still drives your price.

3. Your Claims History

Claims stay on your record for 5–7 years and drastically affect pricing.

• Water claims hit the hardest
• Fire claims hit second hardest
• Storm claims vary by region
• Multiple claims → high risk tier

Before filing anything small, review claims vs premium impact.

4. The Age and Condition of Major Systems

Insurers score your electrical, plumbing, HVAC, and foundation heavily because system failures cause major losses.

• Old wiring → fire risk
• Polybutylene pipes → burst risk
• Old HVAC → freeze or fire issues
• Foundation issues → water intrusion

Major system upgrades can sometimes lower premiums—but only if you inform your insurer.

5. Home Features That Increase Liability Risk

Liability claims are expensive and unpredictable, so insurers are strict on this category.

• Pools or hot tubs
• Trampolines
• Aggressive dog breeds
• Poor lighting or unsafe walkways

If you’ve added risk-heavy features, make sure your liability coverage matches the exposure.

6. Fire Protection Score

Insurers use local fire department ratings to assess fire risk.

• Distance to nearest hydrant
• Distance to nearest fire station
• Response times
• Local water supply strength

Poor fire ratings increase premiums even if your home has modern safety equipment.

7. Your Credit-Based Insurance Score

In most states, insurers use a special score based on your credit history. It correlates with claim likelihood.

• Late payments → higher risk tier
• High credit utilization → higher premium
• Long credit history → lower premium

You can’t change your location risk, but you can control this part.

8. Home Upgrades and Renovations

Insurers adjust risk based on what you’ve changed.

• Roof replacement → lower risk
• Adding square footage → higher rebuild cost
• Finished basements → higher water risk
• Security upgrades → small discounts

If you’re renovating, review upgrades that matter so you know what insurers actually care about.

9. The Condition of the Property

Insurers judge curb appeal differently than buyers—they’re looking for signs of neglect.

• Broken steps
• Loose railings
• Peeling paint or exposed wood
• Overgrown trees touching the roof

Many insurers send inspectors right after binding a policy. Problems here can trigger repair requirements or even non-renewal.