Owning property involves a huge investment. When a person buys a home or office space, he would have paid a big sum of money, given that real estate rates are always on the up move. An earthquake, a storm, fire could cause a lot of damage to the building resulting in heavy losses to the owner. He can protect himself against such losses by insuring his property after carefully studying property insurance rates of different insurers.
An insurance company determines rates of insured property on the basis of various factors.
The age of the building would be considered by the insurer before quoting property insurance premium. As a building gets older, its heating, plumbing and electric systems would have been affected increasing the risk to the building. Property insurance rates would be lower for a new building.
The height of the insured property would also influence the rate of premium. A multistory building beyond a particular height would attract greater premium.
The location of the place where the property is situated would also determine property insurance rates. For instance, a building located near the sea would face greater risk and hence its insurance costs would be higher. Similarly, if the building is located in an area where crime rates are high, the insurance company may quote a higher rate.
Insurance rates would be lower for a property which is well equipped with alarm systems, fire extinguishers and other safety devices.
The claims record for the property to be insured would directly affect the rate of property insurance. A large number of claims would mean higher insurance premium. Similarly, if the insured has a track record of a high number of claims, that too would result in a higher insurance quote. In fact, some small insurers even refuse to sell insurance to such parties.
A deductible is the amount that the insured needs to pay to the insurer before the payment of the insurance amount. If the insured opts for a higher deductible, property insurance rates will be lower. However, the insured must ensure that he can indeed afford to pay the deductible amount in the event of property damage.
Often, insurers prefer to sell insurance to people with good credit rating. Property insurance rates may be higher for people with bad credit.
The type of coverage opted for also influences property insurance rates. The choices available are –
Each kind of coverage will have a predetermined rate.
A person who wants to insure his property should not only consider property insurance rates but also other features of policies offered by different insurers. He should then select the policy which is most advantageous to him.