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The Cost of Coverage — What Affects Rates


Homeowner policy rates depend first of all, of course, on the extent and dollar amount of coverage: a policy with an “all risk” clause will cost more than a policy that covers damage resulting from a limited number of named perils; a policy that provides replacement cost coverage for a $300,000 home will cost more than for a $100,000 home; liability coverage of $300,000 will cost more than coverage of $100,000.

Ways to Reduce Rates


Lower Coverage B and C. In Minnesota, homeowners may reduce their rates by reducing the dollar limits of coverage for structures other than the dwelling (Coverage B) and for personal property (Coverage C). State law requires insurance companies to offer lower than standard limits for these types of property and to reduce the premium accordingly.  If you choose to have lower limits, take care that you are not running the risk of being underinsured. Many people underestimate the replacement value of their personal property.

Higher deductibles: You can also lower the premium by raising your deductible—the amount of money you pay before your insurance company starts to pay for a loss. Doubling your deductible from the standard $250 can often reduce your rates about 12 percent; increasing the deductible to $2,500 can often save about 30 percent.

Safety and security systems: Some companies offer discounts for sprinkler systems, fire and burglar alarms, and similar systems. In the case of mobile homes, tie-downs or ground anchors, which reduce the risk of wind-caused damage, can lower rates.

Discounts and group rates: These are sometimes available to seniors, or members of a professional or business organization. Some companies also offer a discount if you have another policy with them— such as auto insurance—or if you have stayed with the same company for several years. If a company offers these packaged dis- counts to homeowners,  it must also offer them to individuals having a renter’s or a condominium owner’s policy with the company.

Renovation: If a company offers a lower rate for a new home, it most also offer a rate reduction for renovated homes. As an example, a company may give credit for one or more of the fol- lowing: renovated electrical, heating or cooling, and plumbing systems, as well as roof or other part of the structure.

Non smokers receive reduced rates from some companies, since smoking accounts for a large number of residential fires each year.

What Cannot Affect Rates


Minnesota law prohibits insurance companies from adjusting rates based solely on:

  • The geographic location of a town in which the home is located.
  • The age of the home construction (unless identical credit is also offered for one or more renovated systems as noted above).
  • Different zip code areas in the same town.
  • The fact that the homeowner may have previously been denied coverage for the property unless it was for reasons stated in Minnesota statutes 65A.01
  • The fact that the property has previously been insured under the Minnesota FAIR Plan.