There are many factors an insurance company uses to determine the price of your policy:

- The square footage of the house and any additional structures.

- Building costs in your area.

- Your home's construction, materials and features.

- Amount of crime in your neighborhood.

- The likelihood of damage from natural disasters, such as hurricanes and hail storms.

- The proximity of your home to a fire hydrant (or other source of water) and to a fire station, whether your community has a professional or volunteer fire service and other factors that can affect the time it takes to put out fires.

- The condition of the plumbing, heating and electrical system.

If you rent your home or own a condo or co-op, your insurer will not consider the size of the dwelling or building costs. However, the insurance company will take into account factors that make damage to your possessions more likely.

Article Source: Insurance Information Institute