In this section, you'll find out how insurance companies
calculate premiums, how to keep your rates as low as possible, and
how to take advantage of insurance discounts. Calculating how much insurance you need to pay is a bit like
completing a big jigsaw puzzle. You see, insurance companies use a
number of factors to determine your rate. This section explains how
each of these factors affects your final property insurance
premium.
Where you live
How much coverage you have
Type of coverage
Proximity to fire hydrant or fire station
Amount of your deductible
Security features
Where you liveWhere you live definitely makes a
difference in your property insurance rates. Insurers gather claims
experience based on geographical location and adjust their premiums
accordingly. So if you live in an area that has a high number of
theft claims, you'll pay higher property rates than if you lived in
a low-theft area.
How much coverage you haveThe more coverage you purchase, the higher
will be your premium costs. A $20,000 tenant insurance policy, for
example, is less expensive than a $30,000 tenant insurance
policy.
Type of coverageA tenant insurance policy will be less
expensive than a condominium owner's policy. Why? Because your
insurer has a greater exposure to cover for a condominium owner
than for a tenant. For example, a condominium policy covers the
condominium owner's liability exposure to shared common areas of
the condominium. Another consideration -- if you customise your policy with
optional coverages, like a bicycle, plan to pay a higher
premium.
Proximity to fire hydrant or fire stationIt's an advantage to live close to a fire
hydrant or fire station. The closer you are, the greater the chance
your property can be saved if a fire starts.
Amount of your deductibleA standard policy deductible might be $500.
If you choose a higher deductible (the amount you pay on a claim),
your insurance company will reduce your premiums.
Security featuresIt's to your advantage to have a safe home
environment. If you install an alarm system, smoke detectors,
carbon monoxide detectors, or other security features in your home,
your insurance company will offer discounts to reduce your
premium.
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