Choosing A Better Insurance Plan

How Insurance Companies Assess A Home's Risk Level

by Isabella Torres

When you request a quote for home insurance, the agent who prepares the quote will base the price of your insurance on several key things. This can include the value of your home and amount of coverage, but it will also include the risk level of you filing a claim. Insurance companies assess a home's risk level by looking at many factors, including the following four.

Age and condition of the home

Older homes may be more likely to have claims filed on them when compared to newer homes. This is often because of faulty materials you may find in older homes, and an example of this is outdated wiring in the walls. In addition, if the home was not taken care of like it should've been, it might also be more prone to problems. These issues can all lead to claims on homeowner's insurance; and anytime a person is likely to file a claim, the insurance company will view the person as a high-risk policyholder.

Prior claims

If you have made claims on your home insurance policy in the past, or if previous homeowners of your house made claims, you might be considered a higher risk policyholder to the insurance company. Whenever claims are made, insurance companies may have to spend money to settle the claims, and this often causes an increase in premiums for the policyholders.

Distance from fire department

Another way an insurance company assesses risk level is by viewing how far the house is from the nearest fire department. If your home is close to a fire station, you will probably pay less than if the home was far from the station. This factor is used simply because of the effects a fire can have if it is not stopped quickly.

Likelihood of natural disaster or vandalism

Insurance companies also factor in the likelihood of your house being struck by a natural disaster or any type of vandalism. If you live in an area with a high crime rate, you will pay more for your insurance than if you lived in an area with a low crime rate. In addition, you can plan on spending more on your policy if you live in an area that is prone to natural disasters, such as hurricanes, floods, or fires.

There is little you can do about these four factors, but there are other ways to save money on home insurance. If you would like to learn more about this, talk to an insurance agent today. For more information, contact companies like Dallmer Adjusters Inc.