Getting home insurance is easier said than done.
Once you decide to get your home insured, you are faced with a myriad of difficulties.
Which insurer should you consult? Which policy should you consider? What should you include and what should you exclude?
To clear your confusion, you are likely to seek advice from your friends and family. You might have already done that or perhaps you searched the internet to get an idea of the insurance rates. Or maybe you contacted an insurance company to get an estimate quote.
Whatever the case might be, your search would have left you even more confused. One of your friends might have been satisfied with the insurance of a few thousand dollars, whereas another friend might have paid about a million dollars or even more for a property of the same size.
So, why do the costs vary so much?
The answer to that is simple. It is because there are several different factors that affect the rate of your home insurance.
Read on to find out more.
The age of your home
It goes without saying that the older your house is, the more expensive it is to insure.
A property that was constructed long ago will ultimately need more maintenance and repairs. Also, it is more susceptible to damages and therefore, you are likely to file more claims. So, the insurance company will charge a higher insurance for such a property.
The construction materials used
If the structure of your house is made from flammable material such as wood, it is more prone to damage from fire. Hence, you will be charged a higher insurance for such a house as opposed to a house that is made from bricks or concrete.
A man is known by the company he keeps. And your house is known by the neighborhood that you reside in.
Insurance providers keep a close check on the claims filed by other homeowners in your locality. If you live in a disaster-prone area or an area where the crime rate is high and thefts are frequent, then your insurance rate will be higher too.
On the other hand, if there’s a fire station in your region and other issues like sewer backups don’t occur normally, then your rates will be lower.
Other factors on the property
You might own certain things that make your house comfortable and better to live in, but they can damage your house. Such factors that make your house look good but pose a risk are often called by insurers as ‘attractive nuisances.’
These include, for instance, trampolines, dogs, swimming pool and other backyard attractions.
You can take safety measures like putting a net around the trampoline and so on. But don’t be surprised if some companies refuse to provide coverage altogether.
Previous history of your claims
Every insurance provider will judge you by your history of claims filed.
A lot of previous claims mean that you and your household are always at a higher risk of accidents and injuries. This would affect the rate an insurer offers to charge you.
Insurance is for major losses. If you are about to buy insurance for the first time, then make sure to pay for minor damages yourself as this would help you maintain a good reputation in the future.