05 Jul Homeowner’s insurance: what am I paying for?
We don’t often think about insurance if we are not purchasing something that requires a substantial amount of money, such as a car, vacation or a home. In the latter case, insurance is of the utmost importance since it represents of the biggest – if not the biggest – investments of your life as well as the place where you live. So, why wait until the end, when you are about to close a deal, to think about insurance? This part requires a bit of homework to see if you can get a good deal and to avoid paying more than you really need to for insurance. So, what are you paying for when you ask for home insurance?
Location
The first thing an insurance provider looks at is where you live. If you live in an area where frequent flooding occurs, if there are problems with sewers, if your house is situated in an area where there is a great deal of vandalism, then your premium will increase as there is a higher chance of you filing a claim.
Type of home
Believe it or not, the type of home you purchase is also considered when calculating premiums. Things like size, age, materials, location of fire hydrant are all taken into account. If you build a fireplace or a pool, it too will have an impact on your coverage.
You
This may seem strange, but you are also a piece of the puzzle. You could operate a business at home; you could be a smoker; anything that you do at home that is considered as a potential risk of damaging your home will be added to the premium.
However, not everything is taken into account for home insurance. Gas appliances, family size, mortgage amount you’re owing or even the market value of your home: none of these matter to calculate the policy premium.
So, do your homework. Ask for quotes from different insurance providers to see which one is the best for you.