What Information is Used To Calculate Home Insurance Premiums?

Caeva O'Callaghan | January 3rd, 2024

How much you pay for home insurance each month can vary depending on your circumstances: but how does your provider calculate it?

Your insurance provider will use information such as your address, how long you’ve lived in your home, its structure and building materials, as well as its age to determine your home insurance premium.

It will also take into account the kind of contents you have in your home, the general value of your belongings and how much it would cost to rebuild your house from scratch.

In this article, we’ll find out:

  • How does my home insurance calculate my premium?
  • Does my address affect my home insurance?
  • What can I do to lower the cost of home insurance?

When it comes to calculating your premium, it’s all based on one thing: risk. The factors that affect your home insurance premium tell your insurance company how likely you are to make a claim.

How does my home insurance calculate my premium?

When you get an insurance quote, the information you put in is used by insurance actuaries to calculate your level of risk and, therefore, how much your premium should cost. This is why there are so many questions involved when getting a quote.

For example, your lifestyle will affect your insurance in a number of ways. If you have children, they’re more likely to cause damage to your buildings and contents. You’ll probably need accidental damage cover, which normally costs extra, to cover any mishaps.

If you’re a smoker, you’re statistically more likely to cause a fire and if you have dangerous hobbies, such as woodburning, this can be risky as well.

Even your age will affect your insurance. If you’re over 50, insurers will often offer you a discount. This is because you’re more likely to be retired, not have young kids in your home on a regular basis, and you’re probably at home during the day. Whereas if you’re younger, and likely to be working, your house will be unoccupied for longer periods.

The value of the contents of your home – i.e. your belongings – will affect your insurance as well. The more valuable the items you own, the more likely you’re going to want to be able to replace them if they’re damaged or stolen. This means you’ll have to pay more.

Even if your collection isn’t particularly valuable, yet there’s a lot of it – if you have 10,000 teapots, for example – this will affect your cover. In this case, it’s best to get an insurance broker to find the cover you need.

Does my address affect my home insurance?

Yes. In fact, your eircode – and sometimes, your house number – is one of the most crucial factors in your home insurance premium.

This is because in Ireland, some streets are vulnerable to flooding. Others have large tree roots, which can cause subsidence. Flooding is a huge problem in Cork and other areas, so insurance companies want to know where you are in relation to this risk.

And it’s not just environmental factors at play. Your area may be experiencing a surge in crime. In particular, car theft and burglary rates will affect your home insurance premium. Lower-income areas with high crime rates may pay more for home insurance.

On the other hand, if you live in an affluent area, your fancy eircode may be pushing up your premium because insurance companies will assume you may be a higher risk for burglaries.

It’s always good practice to install a home alarm system, but it’s best to consult your insurance provider beforehand to ensure the system will help reduce your premiums. Only certain systems can get you a discount on your home insurance premium.

What can I do to lower the cost of home insurance?

Reducing the level of risk in your home can lower your home insurance, such as installing extra smoke alarms and a burglar alarm.

And when you install locks that meet BS3621 (with the British Standards Institution’s kite mark), this can improve your home insurance premiums. In fact, it can be a requirement for some insurers. Door and window locks approved by members of the Associated Locksmiths of Ireland or the Irish Locksmith Organisation (ILO) could also save you money.

Another way to lower your premium is by increasing your excess. There are two types of excess on home insurance: compulsory and voluntary. Compulsory is a flat fee decided by your insurance provider. You’ll be notified of this when you take out your policy. Not every policy will have a compulsory excess, but they are common.

A voluntary excess, on the other hand, is an amount you can control. A higher excess usually means a lower premium. This means if you agree to pay a bigger one-off fee in the event you make a claim, the insurance company will lower the monthly cost of your policy.

And of course, switching home insurance and comparing quotes can save you a lot of money – but who wants the hassle?

That’s where your broker comes in. Let us know what you’re looking for, and we can compare quotes for you. It only takes a simple call, so pick up the phone and talk to our experts today on 0818 224433 or 042 9359051 or get an instant online quote today using our quote comparison tool.

All Information in this post is accurate as of the date of publishing.