Q: How do insurance companies decide what to charge for home insurance? My rates have gone up considerably, and I haven't even had any claims.

A: They calculate the price according to a number of "risk factors" - - the criteria by which insurance companies rate your property. Risk factors may include: construction materials (brick and stone houses are usually cheaper to insure than frame houses because of the greater risk of fire damage to frame houses); whether the owner lives in the house (owner-occupied houses are considered a better risk); and the location of the house (whether it's within 1,000 feet of a fire hydrant; rural homes more than five miles from a fire hall may be very expensive to insure, because the longer it takes firefighters to reach your house, the greater the potential for loss).

In pricing your policy, insurers will also consider the presence of any safety features, like burglar alarms, smoke detectors, and fire extinguishers. Most companies will offer a discount to homeowners who have installed this equipment.

Although they likely won't discuss it, insurers also take into account the "loss experience" for your particular area. If you live in an area that has been hit with many losses -- more theft claims, more fires, more hail damage, or a combination of factors -- you will probably pay more for your insurance than someone in a comparable house in a "safer" location.

In fact, an insurer might refuse to sell you home insurance if your house is not a good risk; for example, it's too old, not well enough maintained, or has an inadequate wiring or heating system. In that case, you would have to upgrade certain features in order to obtain insurance. Some insurance companies require an inspection before they will agree to insure your home.

Safety issues prove to be a major concern for heating systems involving wood.  Strict regulations are enforced regarding use and installation of wood stoves.  All units must have a CSA, ULC or Warnock Hersey label to be approved.  The installation must be in accordance with the manufacturer's specifications.

Strict compliance is required with the installation of heat shields and clearances from combustibles.  Insurers insist that a questionnaire be completed and photographs provided.  If the information does not meet their criteria, they will either not accept the risk or demand that the unit be disconnected and removed entirely.

The price of your insurance will also reflect the type of insurance policy you choose. The broader the coverage, the more you will pay for it.

Finally, insurance prices are up considerably across the board this year, due to a number of factors that have impacted insurers, including: the rising cost of claims, the high incidence of insurance fraud, declining returns on insurers' investments, and the high cost/lack of availability of reinsurance (insurance purchased by insurers to protect them against large losses on cases they have already insured) because of losses incurred on 9/11.