When an insurance provider is calculating how much they think it should cost to insure your home and its contents, it all comes down to risk; the higher the chance you’ll experience loss or damage to your property and possessions, the higher your home insurance premiums will be.
It’s common knowledge that burglary rates where you live and the level of security your home has are both important factors in influencing the insurer’s decision. But what else affects your cover premiums?
From the material a property’s built from to any previous claims you’ve made, here are the other main points that influence how much your cover costs
How your premiums are calculated
Contents and possessions
Value of contents: The declared value of your home’s contents and possessions is crucial for an insurer in deciding how much the contents element of your cover will cost. Obviously the higher their value, the more you should expect to pay. Don’t forget ‘contents’ isn’t just the items you own which you can literally carry, it also includes fixtures and fittings such as bathroom cabinets and carpets.
Any specifically valuable items? If you own items which are particularly valuable, an insurer needs to know as these may need extra cover, or at least may push up your total premiums.
Size of property: Many insurers will ask you how many bedrooms your home has as a rough way of estimated its size, along with whether it’s a terraced, semi-detached or detached home. Others will just offer a blanket sum to cover your home.
Size matters as, generally speaking, the bigger the home, the more it would cost to rebuild it from scratch.
Construction materials: If your home is of a very modern construction it might have a favourable impact on your premiums. If, however, it’s mainly timber, has a flat or thatched roof, is converted from a somewhat unusual building such as an old barn, water mill or church, it could push up your cover costs or even mean you need specialist insurance.
Factors affecting cover costs
Some factors apply to all elements of your cover, both for the building’s structure and your possessions within it (if you’re taking out combined cover that is, as you may only be buying one or the other).
In particular, these include:
- Security – The more secure homes, with the best locks on doors and windows and high quality alarms, as well as flats that are above the 1st floor level, are looked on favourably by insurers and you’ll pay less for cover than other equivalent homes in your area.
- Postcode – Insurers use postcodes to provide them with a host of information which can affect your premiums. From burglary rates, urban or country, and levels of affluence to subsidence and soil types; all can have a bearing.
- Flood risk – Homes which are in known flood plains, and areas which have flooded before, and are close to rivers or right next to the coast at sea level, will have home insurance priced accordingly to reflect this.
- Urban or rural? – Insurers tend to view the most urban and rural areas quite differently, assigning different risks to each, such as crime and flood risk, for example.
- Claims history – Unfortunately, even if previous claims you have made have been for very good reasons, it usually has an impact on your ‘risk’ profile (i.e. You’re seen as more liable to make a claim, and therefore cost the insurer more, however fair or unfair that is). If you haven’t made any claims in recent years, you’re usually offered a ‘no claims discount’, which varies from provider to provider but which ultimately means you should pay less.
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