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6 Factors that affect your insurance premiums

Homeowners insurance may add to your list of expenses, but you can’t afford to go without it. However, the following factors may affect your premiums.

Lower Home Insurance

Article summary

  • When you are a homeowner, home content and building insurance are essential to ensure that your prized possessions are protected and covered for their full replacement value.
  • Ways to lower your insurance premiums include taking precautions against adverse weather conditions in your area, and keeping your home in good condition, to incidences of claims, and installing safety and security systems.

Home insurance, or buildings insurance, is like a spare tyre in your car. You could go without it, but doing so would be a significant risk. So, while you may be reluctant to add additional expenses to what you’re already paying toward your bond, buildings insurance is a compulsory expense if you have a bond on your property.

What buildings insurance covers

Buildings insurance covers the structure of your property against insurable events such as fire, flood, lightning, wind, etc. It does not cover damage to your personal belongings inside or outside your home, such as clothing, furniture and electronic equipment. These would need to be covered under your household contents insurance.

6 Factors that affect your insurance premiums

We know what the insurers will be looking for when evaluating your home, so here are some tips on securing a more favourable deal:

1. The condition of the building

Insurance providers will look at the structure of your property, the location, and the replacement cost of the property when calculating a quote. For example, a thatched roof will attract a higher premium than a tiled roof because of the inherent fire hazard.

So, if you buy an old building, insurers will see wear and tear, and various design flaws, as a greater risk.

2. The location of the building

Find out if the location you’re in is especially prone to certain mishaps, such as floods (which are among the top three reasons for insurance claims); and take necessary precautions. Investigate potential home improvements you could make, or construction work you could organise, that would make your home more resilient to extreme weather conditions.

3. Performing regular maintenance

Try to keep your home in good condition. That includes not just fixing leaky water pipes or holes in the roof, but clearing away anything that could potentially damage your home, such as tree branches hanging over the roof. Preventative maintenance can result in fewer claims, meaning you won’t be penalised for excessive claims through increased premiums.

4. Your chance of being burgled

Additional security, such as an alarm system; fences; bars on the windows and so on will signify that you take the prospect of break-ins seriously. Safety installations such as a fire alarm will also reduce the perceived risk.

5. Your deductibles

Deductibles (often referred to as excess) is the portion of any claim that you’re willing to pay out of your own pocket. Much like a deposit on a home loan, Raising your deductibles reduces the risk for the insurer and thus earns you lower premiums, although tread carefully, as you want to be able to bear the expense.

6. Clear your credit record

As with banks, insurers see your credit record as the primary indicator of how much of a risk you are. Maintain a healthy credit record by paying bills on time, and keeping your credit card balance low.

Get a good deal on your home loan

As well as saving on insurance premiums, you can save on your home loan interest rates by having a home loan comparison service, such as ooba home loans, apply to multiple banks on your behalf, thus giving you the best chance of securing a good deal.

ooba home loans also offers a range of tools that make the home buying process easier. Start with their home loan calculators; then use their free, online prequalification tool, the ooba Bond Indicator, to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.

How much can you afford?

Calculate the home loan you are likely to qualify for and how much you can expect to pay monthly on your bond repayments.

Calculate

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VAT Increase Disclaimer

Effective 1 April 2018, by order of National Treasury, Value-Added Tax (VAT) will increase from 14% to 15%.

Please note that this increase will retroactively effect VAT-inclusive calculations in articles contained in our website.