A home insurance policy ensures that any loss or damage that occurs to your house is covered by the insurance company. The insured needs to pay a fixed premium to the insurer. Although several companies offer home insurance, not all may offer a fair price. Compare rates among different insurance companies before you purchase insurance. Individuals often wonder why the rates on premium vary drastically. A number of factors determine the varying rates charged on home insurance.
House construction material
The type of house you live in influences the rate charged on premium. Homes that are constructed with wood are at a high risk of being gutted down completely by fire. Wooden houses can also suffer extensive damage caused riots, vandalism, and harsh weather. As the risk of damage, loss, and destruction of such houses is high insurance companies charge high premiums on home insurance. Homes constructed with stone, concrete, and brick are less likely to be damaged by fire and vandalism. As the risk of loss and damage is less in such homes, the premiums charged are low.
Your credit score also determines the rates fixed on premium. If you have an excellent record of paying your bills regularly on time, insurance companies will offer low rates considering you to be a credit worthy individual. An individual with a record of unpaid bills and debts is refused home insurance, or charged a high rate as he/she is considered a high risk candidate.
Location of your home
Insurance companies consider the location of your home when they fix premium on insurance. If your house is located in a neighborhood that prone to theft, burglary, violence, riots and vandalism the risk of loss and damage to the house is exceedingly high. Individuals with homes in such areas are charged a high premium by insurance companies. If you own a house in a peaceful neighborhood, the premium on home insurance would be low as the risk of the house being destroyed by riots and vandalism is less. A house that is in close proximity to a fire station is charged low premium on home insurance as the risk of it being destroyed completely by a fire is minimal. If the fire station is far away from your house the premium charged will be high as the risk of your house gutted down by fire is high.
Security and safety devices
The presence of security and safety devices in your home also determine the rates charged on home insurance. A house equipped with smoke detectors, fire alarms, fire sprinklers, burglar alarms, CCTV (Closed-circuit television) will be charged low premiums on home insurance as the risk of the house destroyed by fire or being burgled is minimized by the security devices installed in the house. The lack of security devices in homes compel insurance companies to charge high premiums as the risk of loss and damage through fire and burglary is high.
Insurance companies may also offer low premiums to retired individuals as they remain in their homes most times, thus minimizing the risk of their house being burgled or catching fire. Apart from home insurance, if you purchase other insurance policies from the same insurance company, be assured of low rates or discounts.
This article was written by Perla Iris of DreamLands Design.