A Guide to Home Insurance Premiums

With the increasing number of home insurance providers available today, it is easy to feel overwhelmed by policy choices and varying premiums. How can you know that you are getting the best cover that your premium can buy? Typically, it is less expensive if you pay your policy every year instead of paying monthly using direct debit. Insurance companies often charge you extra if you pay every month because there is always the chance that you will miss a payment. With an annual premium, the provider is guaranteed to receive all of their money up front.

How is the Premium Determined?

Your premium amount will depend on several factors including:

- Your postcode
- Your home: its current physical condition, the materials used to build it and its age
- Whether you live in a neighbourhood watch area
- The value of your belongings
- Security features such as locks, alarms and security lighting
- The level of cover you require
- The risk of subsidence, storm damage, flood or fire including risk factors like a thatched roof

Generally, the lower the risk of damage or loss to your home or its contents, the lower your insurance premium will be. However, different insurers may view different factors as more important than others, which means that your premium amount will vary depending on the insurance company you choose.

Can I Lower My Premium?

You will want to compare premiums from several insurers before choosing a policy. By doing so, you are increasing your chance of obtaining a competitive rate. Because each insurer will offer cover at varying prices, you can use a home insurance comparison website to view these companies side-by-side and make an informed decision. You may be shocked at the difference in premiums between insurance companies. Compare both the level of cover and the premium; it is not worth buying a cheap policy if the cover is not adequate because you will end up paying more later down the road if you need to make a claim.

Insurance companies view security features as extremely important when considering premium rates. Typically, a provider will lower your premium if you have any of the following security measures:

- A burglar alarm
- New door locks
- Approved locks on windows
- Joining a neighbourhood watch group
- Using time-switch lighting to activate the lights while you are not home
- Security-marking your valuables including your television or computer

Additionally, you may lower your premium if you have earned a no claims discount. Specifically, if you have not filed a home insurance claim within a certain time frame, usually five or more years, you may be eligible to receive a discount of up to 30 percent off your normal premium amount. On the other hand, some insurance companies may give you the option to protect your no claims discount for a slight increase in your premium. This means that if you have to make a claim or two, your discount will still apply.

Copyright David Kane 2012