Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Sep 15, 2020

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The primary factors which affect an insurance company’s rates for homeowner’s or renter’s insurance are the individual company’s loss experience and its administrative expenses.

When an insurance company suffers a tremendous amount of losses (loss experience), the company may run low in its reserves and need to raise rates to make up for the suffered losses. Conversely, some insurance companies only insure “better” risks and have a low loss ratio, enabling the company to offer lower rates.

Another major factor is an insurance company’s administrative expenses. The cost of personnel, marketing, and sales expenses have a major impact upon the price of insurance. A recent trend of insurance companies is to offer insurance direct to you, thus reducing costs by not having to pay sales commissions to insurance brokers/agents.