How Is Homeowner’s Insurance Computed?
Updated: Dec 6, 2021
Are you looking into buying homeowner’s insurance, but you’re not sure if it is something that you need? Sometimes, it may seem like buying home insurance is a luxury that only the wealthy can afford. But in truth, home insurance is something that every homeowner must seriously consider. It is designed to bring back your home and all the possessions it comes with at the same condition before the loss happened – may it be caused by accident, theft or a natural disaster.
What are the factors that insurance companies use to compute for the home insurance rate that they offer?
First, the amount of coverage that you choose will greatly affect the monthly premium you’re expected to pay. If your coverage includes expensive jewellery, art pieces, or even antiques, then you could only assume that your policy will be bigger compared to those who are only insuring their house. In fact, some companies offer a rider to include in the pre-packed insurance companies to cover all the extras that you may have.
Second, the location of your house is something that you seriously need to consider. If you live in an area that is vulnerable to natural disasters and the effect that it comes with, then you can only expect a higher monthly premium. There are several ideal locations to keep those insurance rates lower, but the cost of such properties may come on the heavy side too.
Third, neighbourhood crime, no matter how trivial the theft incidents may be, will always have an enormous impact on how insurance rates are computed. Companies usually offer discounts to those home whose home security system is high end because it means that there are fewer chances that these homes will fall victim to theft. When you choose a home, it is best to live in an area where the crime rate is low and with very little to no fire hazards at all.
There is an overwhelming number of home insurance policies offered by various insurance companies all over Canada. As a result of such a tight competition, not all insurance companies offer the same type of homeowner’s insurance. Some may seem packed than the others, and there are those that only come cheap with very limited coverage. Thus, it is important that you sit down and review all the home insurance policies that you have been offered to make a more informed decision.