How your home insurance premium rate is determined

There are many different home insurance companies and each one provides different premium rates to their customers. There is no uniform charge across insurance companies. The extent of insurance coverage that you purchase will determine how much your premium rate will be set at. There are however many other factors that will affect your home insurance premiums. Below are some of them;

Your home characteristics

These will include the quality of materials used to build your house, how firm/stable your house foundation is and how long ago the house was built. These aspects will be used to determine the worth of your house and how risky it is. The higher the risk the higher your premium rate is likely to be. For example, the risk factor will be higher for a house built wood than that of a house made of bricks. The characteristics of your house will be used to calculate the cost of rebuilding your house in the event of destruction. This together with the cost of replacing your home contents will be used by the insurer to determine your premium rates.

Taking the different policies from the same insurer

When your automobile and home are covered by the same insurer then you are more likely to get favorable premium rates than an individual who insures their car only.

Another thing that insurers check for when issuing home insurance covers is the proximity of the home to essential services such as the fire department or a water source. In line with this, they will also consider the effectiveness of your area’s fire services. This helps them determine the risk involved. If you are not near a water source and not near the fire department, in the event of a fire it is more likely that your house will be completely destroyed compared to an individual who lives near a fire station.

The condition of your home is another key thing that a home insurer will definitely check. If your home is in poor condition it is more likely to fetch higher premiums. If a home is in good condition or is new then the premiums will be on the lower side.

Your claims history

It may be tricky to get lower premium rates if you have had incidents before that led you to claim from the insurer. The insurer will also be keen to check if there have been claims from residents from your area. This helps the insurer know how soon or later they should expect your claim.

The type of cover that you choose will also greatly influence the premium amount that the insure sets for you. Different covers will attract different rates including the optional or supplementary cover.

The deductible amount that you choose;

This is important because the insurer gets to share the burden with the insured. If your deductible amount is high then you will get a low premium rate because the bigger chunk of payment will be from you.

How long you have been with your current insurer

This is another aspect that insurers will consider when calculating your premium rate.

Installation of protective devices in your home

An insurer wants to keep risks at the minimum and so if you have installation such as smoke detectors, sprinkler system, burglar alarms, security installations for windows etc. Any home owner with such will be considered for discounted rates.

Credit history;

This explains why insurers will request for your social security number. It is in order to check your credit report. Depending on how good or bad your credit score the insurer will base your premium rate on it. If your credit score is not so good, then you may be in for high insurance premiums.

Compare Rates

It is easy to get lost when shopping for a car insurance cover. That is why it is important to get quotes from different car insurance companies before choosing which one to work with. It is usually a very important step to consider whether you are looking for health insurance or car insurance. We will provide with all the necessary information you need to help you compare different affordable car insurance.

Most people looking for car insurance companies usually fall into the trap of falling for the best advertised or popular insurance company that may not be as suitable for your needs. Comparison is what will save you from making a choice that may be regrettable in the future.


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