When homeowners think about renovating their homes, most focus on resale value and maintenance costs rather than on the consequences for their insurance. But depending on the type of work done, a home upgrade can raise or lower the cost of coverage for your property.
Features that harden your house against damage may win you a discounted rate, while others that enhance your property value may require a higher and more expensive policy limit. We compared online quotes from five major home insurers to find out how some of the most popular home improvement projects can affect your insurance costs.
- Replacing an old roof had the greatest measurable insurance impact, reducing premiums by up to 22%.
- Similarly, swapping a standard asphalt roof for sturdier materials like metal or tile also lowered home insurance costs.
- Exterior building improvements may harden a home against damage, but the cost of materials tended to cancel out any reduction in the cost of dwelling coverage.
- Enhanced home security systems for fire and burglary did not lead to meaningful savings on homeowners insurance.
Newer, stronger roofs have the highest impact on home insurance rates
Roof work proved to have a greater effect on insurance costs than any other category of improvements we considered. Our online quotes indicated that on average, a home with a brand-new roof would cost $239 less to insure per year than one that was never replaced since the home was first built in 2004.
How much does a new roof save on your home insurance?
|Roof age||Annual premium||Savings vs. original roof|
|10 years||$2,304||$108 (4%)|
|5 years||$2,112||$300 (12%)|
|1 year||$1,872||$540 (22%)|
As with exteriors, the material used to build a roof can seriously affect your homeowners insurance premium as well. The sturdier a roof is, the less likely it is to result in a claim for leakage or hail damage.
Roof material vs. annual home insurance costs
|Roof material||Annual premium||Change in insurance||Cost per 100 sq ft|
Among the five insurers from whom we obtained quotes, a house with a steel or tile roof cost substantially less to insure than a house with typical asphalt roofing. Tiles of clay or concrete led to the greatest discount (22%) on homeowners insurance, likely due to their long expected lifespan compared to a standard asphalt shingle.
The only alternate roof material that increased insurance costs was wood, which usually requires more maintenance than asphalt and has greater vulnerability to damage. According to our data, replacing an asphalt roof with wooden shingles or shake could raise your annual premium by 14%.
Upgrading your exterior may reduce potential damage, but pricier materials raise replacement costs
Aside from boosting curb appeal, upgrading the material of your home's exterior can reduce your risk of damage from leaks and storm debris. However, the higher cost of stronger materials means that you may need a higher — and more expensive — dwelling coverage limit in your insurance policy.
|Cost per 100 sq ft||Annual premium||Change in insurance|
|Cement fiber siding||$500-$1,200||$2,400||-$12 (-0.5%)|
|Wooden siding||$800-$1,200||$2,436||+$24 (+1%)|
|Brick veneer||$500-$1,500||$2,532||+$120 (+5%)|
The most popular exterior construction for single-family homes in the United States is vinyl siding, which consists of vinyl strips with interlocking edges.
The insurance implications of exterior improvements turned out to be twofold. Choosing a more durable, low-maintenance material means that insurers could see your home as having lower risk of a claim for dwelling damage. For example, replacing vinyl siding with more durable cement fiber siding slightly reduced our premium.
However, insurers may also require you to get a higher coverage limit to account for the higher cost of replacing that material if it's damaged. The cost of coverage went up when we substituted wood or brick as the exterior material — both materials cost more than vinyl and raised the dwelling coverage required.
Adding home security systems doesn't significantly lower home insurance rates
Some home insurers advertise discounts to homeowners who report having monitoring systems for fire, leaks and burglary. However, our data suggest that the actual savings on your insurance bill may be close to zero, especially when compared to the amount you pay for the devices.
Home security discounts by provider
|Central fire alarm||Local burglar alarm|
When we obtained quotes from five major insurers, we found that two of them — Allstate and Farmers — did not inquire about home security at all within the online quote form. Among the rest, centrally monitored fire alarms led to a discount of 1% to 5% while adding a local burglar alarm reduced rates by no more than 2%.
Applied to the typical amount that homeowners spend on insurance, the variations we found come out to $14 to $72 saved per year. In comparison, the cost of installing such alarm systems and subscribing to the services that power them can cost thousands on an annual basis.
We analyzed home insurance quotes for a representative address in the U.S. in order to compare the effect of various property variables on prices at five major insurers:
- Liberty Mutual
- State Farm
For each insurance provider, we used the provider's web-based quote form to attain an estimate of annual premiums with different combinations of home characteristics. These included roof age, roof material and exterior construction, as well as any available discounts related to home security.