How do building codes affect homeowners insurance premiums?

Homes constructed to newer building codes often reflect advancements in safety, durability, and resilience against various hazards. As a result, insurance companies typically assess these properties as having a reduced risk of damage. When homes adhere to modern standards, they may include features designed to withstand extreme weather, fire, or other potential damages, leading to the conclusion that these homes are less likely to experience significant insurance claims.

This perceived lower risk often translates into lower homeowners insurance premiums. Insurers understand that newer building codes help mitigate potential damage, allowing them to offer more favorable rates to homeowners whose properties comply with these standards. Hence, a home built according to updated codes might cost less to insure because it is better equipped to handle disasters or other risks, which aligns with the general principle of risk assessment in insurance.