What is an Insurance Premium?

Your insurance premium is one of the most important considerations when purchasing a policy, yet many people don't fully understand what it represents or how it's calculated. Let's break down what premiums are, how they work, and what you can do to manage your costs.

What Does Premium Mean in Insurance?

Simply put, your insurance premium is the amount you pay to keep your insurance policy active. It is the price of protection that you pay your insurance company in exchange for peace of mind in the event of an unexpected, covered loss.

This applies whether you're buying home, auto, health, or life insurance.

Why Premiums Exist: Insurance works on the principle of shared risk. Your premium contributes to a pool that pays for claims when policyholders experience losses.

Premium vs. Deductible: Your premium maintains coverage whether you file a claim or not. Your deductible is what you pay out of pocket before your insurance kicks in for a covered loss. Typically, choosing a higher deductible lowers your premium, but results in more out of pocket costs if you have a loss.

Payment Schedules: Your payment schedule is subject to what the insurance carrier offers.

Slide provides several flexible payment plans, including full payment upfront, a 2-pay option split 60/40, and a 4-pay option divided into 40/20/20/20 installments.

Many homeowners also choose to pay their premiums through an escrow account tied to their mortgage.

How Insurance Premiums Work

You pay your premiums regularly to keep your coverage active. If you stop paying, your policy will be canceled after a grace period, leaving you uninsured.

At renewal, insurers reassess your risk based on claims history, property changes, and market conditions. This is when you'll see premium adjustments.

What’s The Difference Between a Home Insurance Quote and a Home Insurance Premium?

A home insurance quote is an estimate of how much you may pay for coverage based on the information you provide at that moment in time. Insurers calculate quotes using details about yourself, your home, and the amounts of coverage you’re interested in.

A home insurance premium is the final, confirmed amount you agree to pay for home insurance coverage. This is the cost set after the insurer completes underwriting, validates property details, and applies any eligible discounts or surcharges.

How Are Insurance Premiums Calculated?

Insurance premiums are based on risk. Actuaries use data—like age, health, driving history, or location—to predict how likely a claim is and how expensive it might be. The higher the risk, the higher the premium, because the insurer needs to collect enough money from all policyholders to cover potential payouts and operating costs.

Home insurance premiums are based on risk—specifically, how likely a covered loss is to occur and how costly that loss could be. This often factors in the home’s location, age, construction materials, roof shape, roof condition, replacement cost, coverage limits, deductible choice, and exposure to risks like severe weather or natural disasters.

The Role of Underwriting: Before finalizing coverage and pricing, insurers review and confirm details about a property to evaluate the likelihood of a loss occurring there. Homes with features or locations associated with higher loss frequency or severity—such as older roofs, high replacement costs, or greater exposure to storms—may result in higher premiums.

What Do My Insurance Premiums Pay For?

Here's what insurance premiums include:

• Paying for Claims: The majority of insurers pay for policyholders' covered losses.
• The Cost of Reinsurance: In high-risk states like Florida and South Carolina, insurers buy reinsurance—insurance for insurance companies that helps them pay claims when losses exceed expected levels—to ensure they can cover catastrophic hurricane damage. As the cost of this back-up coverage rises, those higher reinsurance expenses directly flow into the premiums homeowners pay in coastal states.
• Business Operations: A portion covers claims adjusters, customer service, technology, and regulatory compliance.
• Maintaining Financial Surplus: Insurers maintain reserves to pay future claims and remain solvent during catastrophic events.

What Factors Determine Your Home Insurance Premium?

Premiums depend on the risk profile of your property and your coverage choices. Here's what matters most for each type of insurance.

Factors for Homeowners Insurance Premiums

• The Property: Location (coastal hurricane risk), construction type, age, condition, and roof characteristics.
• The Coverage: Your selected deductibles will typically raise or lower premiums; while add on coverages (endorsements) increase them.
• Your History: Some non‑catastrophic claims may lead to a surcharge at renewal, while weather‑related “Act of God” losses may not impact your rate. We also review your recent claims history to help ensure continued eligibility for coverage.
• Protective Devices: Wind-mitigation features and security systems may qualify for discounts.

Why Did My Insurance Premium Increase?

Premium changes usually come from two places: what changed with your home or policy, and what’s happening across the market.

Micro Factors — Things You Can Influence

Recent claims: Some claim types are more likely to affect your premium at renewal—especially losses insurers see as more likely to repeat (for example, non‑catastrophic water damage, theft, or liability).

Storm-related losses: Severe weather and other acts of nature are handled differently because they’re outside your control. We focus pricing on risk you can manage—not the weather.

Coverage changes: If you increased limits, added endorsements, or changed your policy selections, your premium can change too.

Property changes that increase exposure or rebuild cost: Additions like solar panels, a swimming pool, major renovations, or upgrades that significantly increase replacement cost can shift your risk profile.

Macro Factors — Broader Market Conditions

Inflation & repair costs: Labor and building materials cost more, which increases the cost to rebuild.

Severe weather & catastrophic losses: Big storms can drive higher losses across the state and region.

Rising reinsurance costs: Reinsurance helps insurers pay claims after major events—and those costs are higher in coastal states.

How Can I Manage or Lower My Insurance Premiums?

It’s essential to review and customize your coverage to ensure you're not over‑ or under‑insured. You can explore and adjust many elements of your policy directly in the mySlide app or online, or connect with a Slide agent or Slide insurance specialist—both can help you find the right fit for your needs and budget.

​​Ask About Discounts and Savings

Slide offers multiple ways eligible customers can lower their premium, based on policy preferences and home features:

Senior Discount: A discount may apply when at least one named insured is 62 or older as of the policy’s effective date or renewal, reducing the Base All Other Perils premium.

Paperless Discount: Opting to receive policy documents electronically qualifies you for a $10 paperless discount.

Home‑Safety and Wind‑Protection Savings: Depending on your home, additional savings may be available for features like wind mitigation, monitored fire or burglar alarms, sprinkler systems, secured‑community features, and other wind‑resistant protections.

Florida‑specific opportunities: Some Florida policies may also see savings such as a Citizens Takeout Discount on first renewal when eligible, plus wind mitigation credits based on inspection results.

South Carolina‑specific opportunities: South Carolina programs may include savings tied to features like roof age, wind opening protection, hip roof design, building‑code compliance, new purchase discounts, protective devices, secured community/theft, and companion policy discounts.

You can review and update preferences like paperless delivery in mySlide, and your Slide agent or Slide insurance specialist can help confirm which discounts apply.

💡 Pro‑tip: Lower coverage or a higher deductible may lower your premium, but can mean higher out‑of‑pocket costs during a claim—check in mySlide or with a Slide agent/insurance specialist before making changes.

Maintain Your Property: Regular maintenance and upgrades can reduce risk and lower premiums. Some home upgrades that may help reduce premiums include updated electrical, plumbing, HVAC, and roofing systems completed within the last 15 years. Replacing a hot water heater within the last 5-6 years, depending on whether it is located inside or outside the living space, may also help lower premiums.

Next Steps: Review, Compare, and Protect

Understanding your insurance premium empowers you to make informed coverage decisions. In states like Florida and South Carolina, where hurricane risk drives premiums higher, working with a financially stable insurer matters.

Slide offers flexible coverage options to help you balance premium costs with the protection you need. Backed by strong financial ratings and a commitment to serving our customers, we strive to provide reliable coverage—even when severe storms affect our region.

Ready to customize your home insurance coverage? Get a free quote and see how Slide can fit your needs and budget.