What factors are included in home insurance premium calculations
Insurance companies take a variety of factors into consideration when determining the cost of your home insurance. These factors will help the company estimate how likely you are to make a claim and how much that potential claim will cost.
Here are the top 5 factors insurance companies use to determine your home insurance premium.
- The location of your home. Your address can significantly impact the cost of your home insurance. Insurance companies use your postal code to identify the type and frequency of claims made in the area to determine how likely you are to make a similar claim. For example, if you live in an area where flooding often occurs, your insurance could cost more than if you lived in a place where flooding occurs less frequently.
- The age of your home. As your home ages, there is an increased risk of issues like faulty pipes, older wiring, leaky roofs, and cracked foundations, which could increase the likelihood that you’ll have a claim for damage caused by water or fire. As a result, owners of newer homes often pay lower premiums, and premiums tend to increase as homes age.
- The heating system in your home. Homes with oil heating typically cost more to insure than homes with electric heat or gas furnaces, as oil tank leaks can damage your property and the surrounding environment. If you heat your home with a wood stove, which can increase your chances of having a house fire, your premium will also likely be higher.
- The type of basement in your home. Today, many homes have finished basements that are used for extra living space, at-home gyms, media rooms, offices, and more. Not only do finished basements tend to contain more furniture and valuables than unfinished basements, but they also cost more to repair because of the types of building materials used. A claim for damages to a finished basement and its contents would likely be higher than a claim for damages to an unfinished basement. This can result in higher premiums for homes with finished basements.
- The distance between your home and a fire station or hydrant. If your home is close to a fire station or hydrant, there’s a better chance of saving more of your property if a fire occurs. This usually isn’t a problem in urban areas and doesn’t affect premiums, but if you live in a rural area that’s farther away from a fire station or hydrant, your home insurance could be more expensive.
If you have any questions about your current home insurance policy or would like a free no obligation quote, please contact Munn Insurance toll-free at 1-855-726-8627 today.