How Are Premiums for Home Insurance Calculated?
Once you already determined to rely on a home or property insurance for your home, which, by the way, is really important in order for you to feel safe, it is crucial that you consider how this insurance is calculated and what you may pay in case you decide to opt for it in the future. It is completely impossible to set an established premium for every single person in all states and places. These rates vary depending on some factors that, at the end, will affect your final premium. One important factor lies in the level of coverage, which has a real impact on the final premium. In this sense, the higher level of coverage you purchase, the higher premium costs you will have to pay. For instance, a $35,000 tenant insurance policy is, obviously, more expensive than a $15,000 tenant insurance policy.
Another main factor refers to the geographical location. If it has been categorized as a high-theft area, you will pay higher rates. If it is considered to be a low-theft area, it is, of course, going to be cheaper. As an example, according to the Insurance Information Institute, a homeowner in the state of Alabama, which was placed in the 19th place in their rank, paid $533 as an average in the year
2002, whereas a homeowner in the state of Maine paid $416 as an average in the same year. Another example is the contrast between the states of Louisiana and Wisconsin, which the average rates were respectively $840 and $340 in the year 2002.
A third aspect that definitely affects the final premium you will deal with when insuring your home is if you are whether a homeowner or a renter. Evidently, the renter usually pays less than the homeowner. For example, in the state of Michigan, an average homeowner paid a premium of $577 and the average renter, $184 four years ago. Fourthly, the amount of your deductible really influences your premium. A standard deductible of a policy may be $500. If you decide on a higher deductible, your premiums will be reduced. Thus, now you know more or less what you may expect to pay depending on your specific requirements, you are prepared to go start the proceedings to get home insurance. However, always look for a professional able to assist you in order to be provided with more precise information.
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