a CA home in need of home insurance

Factors Affecting Your California Homeowners Insurance Policy

Insuring your home isn’t getting any less expensive, so you naturally want to do what you can to reduce costs. However, insurers use many factors to determine your premium so you need to understand where you can safely shave off a few dollars, and where it is risky to do so.

Here are a few factors that could affect your California home insurance rates and what you can do to minimize cost and ensure adequate coverage.

Replacement Cost

The replacement cost of your home is the amount it would cost to build a new house precisely like the one you have now in the same location.

It isn’t appropriate to use fair market value since the amount includes land and it takes your home’s age, location, square footage, amenities, and condition into account. It isn’t appropriate to use your mortgage balance either, because your balance decreases with every payment and your home normally increases in value over time.

Consequently, using market value could lead to you buying more coverage than you need and using your mortgage balance could leave you considerably under-insured.

The best way to determine replacement value is through a professional appraisal. The cost of an appraisal depends on your location, but it is well worth the expense. It provides solid evidence should you need to file a claim for damage or a total loss. Older homes sometimes cost more to rebuild than newer ones since they have expensive details and many home improvements, which increase value.

Policy Deductible

Your deductible is the amount you pay before the insurance company pays your claim. According to the Insurance Information Institute, most insurers recommend a $500 deductible, but that doesn’t mean that’s what you must choose. If you choose a higher deductible, it can lower your premiums.

This doesn’t mean you should necessarily choose the highest deductible either. You need to balance your deductible against your ability to pay if a loss occurs. However, the III states raising your deductible from $500 to $1,000 could save you as much as 25 percent. A higher deductible also discourages you from filing claims for small losses, and insurers always look at your claim’s history.

Liability Limits

Buying a policy with a low personal liability limit like $100,000 might save you a few bucks in the short-term, but it puts you at considerable risk. A lawsuit could eat up that limit in no time. Consequently, insurance experts recommend at least a $300,000 liability limit.

Medical payment coverage has its own limit. Ensure you have at least $5,000 coverage. The additional cost of these higher limits is nominal compared to losing your assets and future income.

Wood-Burning Stove

Many homeowners enjoy the warmth and energy-saving benefit of a wood stove, but owning one usually increases your insurance premium. However, you may be able to lower your expense if you provide your carrier with proof of installation by a licensed contractor.

Additionally, smoke detectors throughout your home and a nearby fire extinguisher may help reduce your premium.

Swimming Pool or Hot Tub

If you have a swimming pool or hot tub on your property, you definitely need to address your liability coverage. Besides bumping up your liability coverage to $300,000, the Insurance Information Institute also recommends an umbrella policy. This coverage kicks in if a lawsuit exhausts your homeowner’s policy’s limit and they’re affordable.


Trampolines cause many head and spinal injuries, and fractures which can lead to lawsuits. As a result, insurers charge you a higher premium to accept the risk.

If you haven’t bought a trampoline yet, consider the risk. Trampolines lead to around 92,000 hospital visits annually, so you may want to try an alternative activity. If you have a trampoline and don’t tell your insurer, they will not provide coverage if there’s an accident and may even cancel your policy.

Claims History

Insurance companies recognize the correlation between past claims and the likelihood of future ones. If you’re looking to lower costs, definitely order a free copy of your Comprehensive Loss Underwriting Exchange Personal Property (C.L.U.E.) report and check it for accuracy. It shows all the claims you filed within the past seven years.

Insurers rely on the information in your report, so errors can cost you. If you find a discrepancy, contact them through the customer support link on the website above.

Insurance is a very complicated industry, so it doesn’t make sense to go it alone. Rely on an independent insurance agent with expertise. They work for you and provide unbiased advice. They’re your best tool to find excellent coverage and the best possible rates.