Your home is your biggest investment, financially as well as emotionally. It is a space where you spend the most time with your loved ones. To protect such a valuable investment, it is essential to insure it in the right way. A good home insurance policy will not only provide you financial coverage against damages that arise from unforeseen risks and dangers to your house and property but also insure your contents.
For many homeowners and tenants, an important point of consideration while purchasing home insurance is the premium to be paid every year. In this article, we look at some of the significant factors that influence your home insurance premium. Let’s go.
#1 – The sum insured
Stating the obvious here, but your sum insured is the most important factor in deciding the cost of your home insurance premium. The sum insured refers to the amount you will receive from the insurer when you make a claim on your policy. To ensure that you get an amount sufficient for your needs in times of trouble, you must consider several risks and then choose the correct sum insured.
# 2- The coverage you have opted for
The coverages offered in home insurance differ between insurers. Coverage against risks arising from fire, natural calamities, burglary, and so on are usually covered in most home insurance policies. However, there are several riders and optional covers that many insurers provide. An increase in coverage means an increase in premium. If you have opted to extend the coverage to the contents of your house as well – like art and decor, personal appliances, furniture, and so on, your premium is likely to increase.
- The age and build of your house
Insurers calculate the premium of an insurance policy by using their data to understand the probability of the insured risks happening. In home insurance, this probability is highly dependent on the age and build of your home. How old is your house, what construction materials went into its making, how sturdy and strong it is to withstand climatic disasters…insurers evaluate these factors and more. A stronger house means lesser risk or damage, and thus, less chance of a claim. This would mean lower premiums and vice versa.
Therefore, it is also advisable to buy insurance for your home when it is new as the insurance premium would be quite low at the start.
- The safety measures taken
Whether you have installed safety systems to protect your home and its belongings or not will also determine the premium you pay towards your home insurance. You may save money on your home insurance premium if you install burglar alarms, smoke detectors, deadbolts on doors, and so on as these devices do reduce the risk of burglary.
- The location of your house
A home located in a safe neighbourhood is likely to have a lower premium rate as compared to a home located in an area where home burglaries are common. Similarly, a house situated in an area that is prone to weather issues or natural calamities will have a higher premium.
Do remember that the features and exclusions of home insurance policies differ between insurers. Kindly read the policy documents carefully and contact your insurance provider before going ahead.
We hope this article has increased your understanding of the various factors that influence your home insurance premium.