Home insurance may be like an unwanted expense for some, but due to the nature of protection it provides you, it becomes an indispensable piece of investment that no homeowner should be without. The main issue with home insurance of course is the vastness of it. With different policies, coverages, and exemptions to think about, home insurance can really be confusing, especially when you do not understand how many of the terms and jargons used by insurance agents work. Due to this, a lot of homeowners do not really have a good comprehension over the premiums they are paying and why some pay higher premiums than others.
The truth is that many of the premium charges are usually not questioned by homeowners’ policyholders. However, once you become more aware on how these premiums are determined, you can try to work out some of the factors so you can lower your costly rates.
When it comes to home insurance, it is all a matter of gauging the risk your home has. When insurance companies determine your insurance rates, what they are really determining is the risk your home is exposed to. Here are some of the determining factors that insurers follow when assessing risks:
- Home Location – if your home is located in an area where there is very high risk of crime, such as theft or breaking and entering, then this greatly increase the risk of your home being prone to damage, vandalism, or theft. For this reason, if you live in such an area, the amount of home insurance premium you need to pay will be a lot more than if your home were settled in a crime-free area.
- Cost of Construction in Your Area – insurers will likely take into consideration how much it costs to build or rebuild in your area should your home be destroyed. If construction cost is very high, then that would likely reflect on the insurance premium you need to pay for your home insurance policy.
- Materials Used in Construction – if your home was built using highly reliable materials such as brick or concrete, it means it would be able to better withstand hurricanes and tornado and thus will likely make your home insurance premium much lower as there is lesser risk in insuring you.
- Other Factors – if your home has swimming pools, trampolines, or dog breeds that are in the insurer’s list of high risk dog breeds, then expect to pay a higher amount of home insurance premiums as these are all factors that can lead to injury within the property. In fact, there may be some insurers who will deny insurance for any of these factors being present when getting home insurance.
If you are looking to lower your home insurance premiums, then you should need to look into things that will help in lowering your overall home insurance premiums. Although this may look like an extra effort or even cost on your part, such actions will not only help in lowering your home insurance premiums, but it will help in making your home better, safer, or even tougher. If your insurance thinks you are low risk, then it just means that you home is a good one to stay in because there is no prone to any risks. Here are some ways on how you can make your home better:
- Make Your Home Safe – the need for a backyard swimming pool is a must for some so do not let insurance be a deterrent in building a swimming pool. Instead of omitting a swimming pool which you really want or even need, or paying high premiums in home insurance, consider fencing the swimming pool so children cannot enter the swimming pool area freely.
- Make Upgrades – some upgrades can be as inexpensive as installing smoke detectors and deadbolt locking system in your home. Making these upgrades can greatly help with the overall premiums on your home insurance. Or, if you can make expensive upgrades like installing a home sprinkler system, a better HVAC system, and surveillance systems, then you are looking to significantly cutting the cost on your home insurance premium.
Home insurance may seem and look quite tricky at first. However, if you start paying attention to the simplest details, you will know and understand that the insurers are also taking risk by insuring your home. If your home is of high risk, then it is only normal for them to ask for a high premium. On the other hand, if your home is of low risk, then do expect to have a much lower home insurance premium as the insurers have very little risk in insuring your property. To benefit from this, it is in your best interest to do the necessary upgrades to have insurers consider your home of lesser risk.