Calculate your home insurance premium - 10 Feb 2010 16:43
The world of home insurance can seem like a murky swamp of numbers and calculations to the average consumer. When you take out a policy, your insurer asks you all sorts of questions from “How old are you?” to “What colour is your underwear?” We explore the swamp to show you how your insurer uses the answers to these questions to calculate your monthly premium.
Are you covered?
Your home insurance premium will vary depending on the extent of the cover you choose. You may choose only to cover the home itself, to include the contents of your home against theft or damage, or to extend this cover to loss of use. The more comprehensive your policy, the higher your premium.
How much is your home worth to you?
Your monthly premium will reflect the value of your home. This value will change over time as you make improvements to your home and as the value of the area it is in increases or decreases. To make sure your policy is up to date, you should have it re-evaluated every year or two.
Is your home secure?
When calculating the value of your home, your insurer will consider whether you live in a high- or low-theft area, as well as your proximity to a fire station. Whether or not you live in a high-theft area far from a fire station, insurers usually offer discounts for fitment of burglar alarms or smoke detectors.
Have you claimed before?
Always disclose previous claims you have made. If you have made a claim within the last two years, your premium will increase as you will be labelled as high risk. However, if you have not disclosed these claims and your insurer finds out, they will not ultimately pay out when you need to claim again.
In short, the questions your insurer asks determine the risk that you pose. If you are high-risk because you live in a high-theft area or you have claimed before, or if the value of your policy is high, you will pay a higher premium. There are a number of ways to lower your premiums. However, ask yourself: Do these savings pay off if you have to claim?
The world of home insurance can seem like a murky swamp of numbers and calculations to the average consumer. When you take out a policy, your insurer asks you all sorts of questions from “How old are you?” to “What colour is your underwear?” We explore the swamp to show you how your insurer uses the answers to these questions to calculate your monthly premium.
Are you covered?
Your home insurance premium will vary depending on the extent of the cover you choose. You may choose only to cover the home itself, to include the contents of your home against theft or damage, or to extend this cover to loss of use. The more comprehensive your policy, the higher your premium.
How much is your home worth to you?
Your monthly premium will reflect the value of your home. This value will change over time as you make improvements to your home and as the value of the area it is in increases or decreases. To make sure your policy is up to date, you should have it re-evaluated every year or two.
Is your home secure?
When calculating the value of your home, your insurer will consider whether you live in a high- or low-theft area, as well as your proximity to a fire station. Whether or not you live in a high-theft area far from a fire station, insurers usually offer discounts for fitment of burglar alarms or smoke detectors.
Have you claimed before?
Always disclose previous claims you have made. If you have made a claim within the last two years, your premium will increase as you will be labelled as high risk. However, if you have not disclosed these claims and your insurer finds out, they will not ultimately pay out when you need to claim again.
In short, the questions your insurer asks determine the risk that you pose. If you are high-risk because you live in a high-theft area or you have claimed before, or if the value of your policy is high, you will pay a higher premium. There are a number of ways to lower your premiums. However, ask yourself: Do these savings pay off if you have to claim?