Home insurance policy
Have you ever wondered what goes into determining how much you pay for property insurance? There are a lot of things involved, but it all comes down to risk. Your insurance company takes a risk by issuing a policy that could eventually cost them a significant amount of money. The higher their risk of loss, the more money they charge you by way premiums.

Risk is related to two additional factors that insurance companies use to determine rates. First is the likelihood that you will make a claim of total loss at any point during the life of your policy. Insurance companies use mountains of statistical data to try to predict the level of this risk. Second is the likelihood that any claim you make will occur before the amount of money you have paid in premiums earns enough returns to offset the cost of a future claim.

Though all of this may seem a bit complicated, you can often reduce the cost of your property insurance by installing monitored home security. Insurance companies love security systems because these reduce the risks of:

Burglary and home invasion.
Extensive damage from house fires.
Injuries and deaths related to fires and carbon monoxide poisoning.

Contact your insurance company and ask if your insurance premiums would fall after installing monitored home security. You might be surprised to find out how much you could save.
Risk Factors for Property Insurance Companies

It is not practical or possible to list all of the risk factors that insurance companies consider when coming up with property insurance rates. But we have put together a list of the most common factors. Some of these factors are directly related to the same issues covered by monitored home security.

Distance from emergency services – Rural properties tend to be at greater risk because they are further away from emergency services. Likewise, urban and suburban properties pose a lower risk the closer they are to fire departments, police departments, etc.

Size and construction – Larger homes tend to cost more to insure because there is more physical property to cover. Likewise, higher construction quality tends to lead to higher premiums. Some of the most expensive homes to insure are custom-built homes in expensive neighborhoods with large lots.

Security features – As previously mentioned, security features (or the lack thereof) have a definite impact on insurance rates. Homeowners who install security features such as alarms and heavy-duty doors and locks often enjoy lower premiums.

Home Contents – Insurance claims deal with both structures and their contents. This is true in the case of both burglary and fire. Therefore, the more valuable the contents in your home, the higher your insurance premiums are likely to be.

Past Claims – Homeowners with numerous past claims can expect higher insurance rates. Every claim tells an insurance company that risk is higher, whether those claims are due to homeowner carelessness or things that are out of the individual’s control.

It should be obvious that insurance companies must do what they can to protect their financial stability. At the same time, homeowners want to protect their properties and still have the knowledge that any claim they do make will be paid promptly and fully. It is a balancing act for both parties.

We encourage you to consider adding a monitored home security system to your property. Doing so should lower your insurance premiums noticeably.

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