Five Factors That Affect Your Home & Contents Premium

Home and contents insurance, like all other forms of insurance, takes several variables into consideration when determining the premium you have to pay to get the level of cover you want. We’ve put together a short list of 5 of the most important of these variables insurers use when determining how much you should pay.

1. The sum insured

This is also commonly presented in the question form of how much would you like to be insured for? It is the most you can claim. The sum insured is shown on your Certificate of Insurance. Basically the larger the sum insured the higher the premiums you can expect to pay. It is particularly important to note that doubling the sum insured doesn’t mean you’ll double your premium which may be a misconception among a significant proportion of the insured population who have a tendency to underinsure.

2. Where you live

Different suburbs have different risks for certain events such as flooding, cyclones, bushfires, burglary etc based on past experiences in that particular area or region. The greater the incidence of these kinds of events in a particular area, the more likely it is that your home and contents insurer will perceive it as a risk in the future and price your premiums accordingly.

3. Excess amount

The excess is the amount you have to pay for each incident if you make a claim to your home & contents insurer. You can reduce the premiums you pay by agreeing to pay a higher excess each time you make a claim. This might sound appealing but it also means that if you agree to pay a higher excess it reduces the chance that you’ll make a claim for less expensive damages or losses.

When you make a claim, the agreed excess amount is deducted from the amount of cover provided by your policy. You can always check the amount and type of excess that applies to your policy by looking at your Certificate of Insurance.

4. The oldest person living in the house

Believe it or not, sometimes age does have its perks and from an insurer’s perspective, older people are viewed as being less risky for certain events. This point is pretty self explanatory but just to be clear it doesn’t mean you should go borrow grandma from the old age home just before buying your home and contents insurance but rather that, in general, a 45 year-old couple is perceived as being a safer bet than a 25 year old couple when it comes to risk of damage to the property.

5. Home Security

Not to be confused with Homeland Security, this is the type of security you have for your house. Again to be clear, home security does not mean the baseball bat under the bed or the family Shitzsu “Lady” but rather home security screens on doors & windows, home alarm systems, home alarm monitoring and even smoke detectors etc. Home security is more relevant for contents insurance and the more deterrents there are for a would-be burglar at your home the lower your premiums will be.

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