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Selecting the right home insurance looks like one of the most difficult job for the home owners. Due to this, many home owners fail to understand completely that what factors the home insurance premium and on what basis the insurers calculate the premium amount. However, once the home owners understand on what factors the insurers calculate the premium amount, they can work on them efficiently to reduce the premium cost and say goodbye to the expensive home insurance rates.
When an insurance company calculates the monthly, quarterly, half year or annual insurance rates, they actually determine the risk. According to the III (Insurance Information Insurance), insurers consider the following factors to determine the risk factor involved with your home.
The location of your residence:
If you have built your residence in high risk areas such as gulf coast, crime riddled neighbourhoods, flood prone area and to name a few, it drastically increases the chances of your home significantly affected by natural calamities or man made damages. Due to this reason, you need to pay huge premium rates.
The cost of construction:
Some insurers also check the amount you spent on building your dream home and also consider how much amount is required to rebuild your house if it is severely damaged by natural calamities or due to any other reason. The higher the construction cost, the higher the premium amount you need to pay.
The material used to construct your home:
Materials like brick and stone tend to withstand the high winds. If you residence is constructed by these materials (partially or completely), you can expect low premium Home Insurance cost.
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