June 22, 2024

How are Home and Content insurance premiums calculated?

Home and contents insurance premiums are calculated based on several factors that assess the risk associated with insuring your home and personal belongings. Insurance providers use a combination of these factors to determine the cost of your premium.

While the specific details may vary among insurance providers, here are the common factors that influence how home and contents insurance premiums are calculated:

Location: The location of your home plays a significant role in determining your premium. Insurance companies consider factors like the area’s crime rate, proximity to emergency services, susceptibility to natural disasters (such as floods, bushfires, or earthquakes), and the overall safety of the neighborhood.

Type and Age of Home: The type of dwelling you have (e.g., house, apartment, condominium, unit, multiple story home, duplex etc.) and its age can impact your premium. Older homes may have higher premiums due to a higher risk of maintenance issues or outdated electrical and plumbing systems.

Size and Square Footage: The size of your home, including the number of rooms and overall square footage, can influence the premium. Larger homes may cost more to insure.

Security Features: The presence of security features, such as burglar alarms, smoke detectors, deadbolt locks, and security cameras, can lead to discounts on your premium.

Construction Materials: The materials used to build your home can affect the premium. Fire-resistant and durable construction materials may result in lower premiums, while homes with flammable materials may have higher premiums.

Personal Belongings: For contents insurance, the total value and type of personal belongings you want to insure will impact your premium. High-value items like jewelry, art, or electronics may require additional coverage and will affect the cost.

Claims History: Your previous claims history, if applicable, can impact your premium. A history of frequent claims may result in higher premiums.

Policy Coverage and Limits: The type and extent of coverage you choose, as well as the coverage limits (i.e., the maximum amount the insurance company will pay in the event of a claim), will affect your premium. Higher coverage limits and additional policy features typically result in higher premiums.

Deductible or Excess: The deductible is the amount you agree to pay out of pocket before your insurance policy kicks in. Choosing a higher deductible can lower your premium, but it means you’ll pay more in the event of a claim.

It’s essential to review your policy options carefully and work with your insurance broker to customise coverage that meets your specific needs while staying within your budget. Premiums can vary significantly between insurers, so it’s a good practice to talk to an insurance broker to help you compare quotes from different companies to find the best coverage at the most competitive rate.

Contact ARMA Insurance Brokers today.

  • Phone: 02 4932 4444
  • Email: maitland@armainsurance.com.au