Home insurance is a contract the object of which is to pay compensation to the subscriber who is the victim of an accident occurring during the occupation of home and against a premium called the home insurance premium. This pecuniary compensation is paid for the damage suffered by the victim, but also for several other parameters. If you were going to take out such insurance, now is the time to understand how to assess the premium.
What is the home insurance premium?
In fact, the home insurance contract allows the insured to be compensated on a personal basis for any bodily injury or material damage, but also for third parties to be compensated. The home insurance premium is the sum of money paid by the underwriter of a home insurance policy to an insurance house, in return for guaranteed coverage and protection. The home insurance premium is paid on an annual basis.
To present it in a concrete way, it is the annual sum that you pay to an insurer to benefit from protection against the risks inherent in a possible degradation or possible accidents that could affect your apartment building as well as the thirds.
Several elements make up this bonus:
- the cost of the risk: it is assessed by the insurer and represents the probability that the insured will be the victim of damage related to his place of residence and the probability that this place is a source of damage for third parties;
- management costs: the home insurance premium also includes the costs associated with handling the case so that the insurance company can draw on it to cover its operating costs;
- the commercial margin: this is the profit that each insurer expects to achieve on each contract subscription;
These are the three main components of the insurance premium, each of which is carefully calculated and evaluated by home insurance insurers.
How is the home insurance premium calculated?
Several criteria are taken into account when calculating the insurance premium. It is :
- the type of dwelling: the home insurance premium includes in its calculation the dimensions of your place of residence, the nature, the surface, the number of rooms, etc. The insurance premium changes according to these elements. The larger they are, the more the amount of the premium increases;
- the profile of the insured: this involves verifying whether the policyholder is the owner or tenant if he has already had to face risks in the past, and to ask him a number of questions about his personal profile ;
- the geographical area: this is the area in which the place of residence is located. The home insurance premium would therefore not be the same in Paris as in the suburbs or in less populated cities;
- the value of the place of residence: it includes both the market value of the building and that of the valuables that you keep in your place of residence. You will have to declare all assets honestly so as not to vitiate your insurance contract.
Can the insurance premium increase?
The insurance premium may increase. It is already obvious that the amount of the premium to be paid depends on the formula for which you have subscribed. The amount of your home insurance premium may then change depending on certain factors:
- in the event of additional guarantees: if over time, you feel that you have moved from one guarantee formula to another more complete, your insurance premium will increase. This will also be the case if you wish to include in your insurance contract, another beneficiary among the members of your family;
- recurring claims and accidents: if too many claims and accidents occur in a short period of time, your insurer may invite you to review the clauses of the contract that binds you;
- the levy of taxes: the home insurance premium will also increase depending on whether the compulsory tax regime to which your insurer is subject also increases;
- revision of the insurer’s commercial policy: because of their charges, insurers can revise the prices of their home insurance contracts;
- the reassessment of risks: on a regular basis, insurers review their rates. It can happen to see them increase.