Home insurance companies use many different factors to determine your risk and premium, here's just a few of them.
How much cover you need
If you know the factors that affect premiums on contents and buildings policies, you should be able to get an idea of whether your cost of cover is likely to be higher or lower than average.
The level of cover you need probably has the biggest impact on your premiums, as you would expect.
It's important to make sure you are covered for the full value of the possessions in your home.
Bear in mind that if there is a flood or fire, you could be asking your insurer to replace the lot — and if it finds out you don’t have enough cover, it could reduce your payouts.
You’ll also pay more if you have any valuable items to insure: most policies will require you to cover possessions worth more than a specific amount (for example £1,000 or £1,500) separately.
The amount of cover you need on a buildings policy depends on how much it would cost to rebuild your home in the event of it being destroyed by fire or flood, for example.
This is not the same as your property’s market value: the rebuild cost is basically materials and labour, whereas the potential selling price is based on other intangibles such as location and proximity to good schools.
When you're looking for insurance quotes online, you should be able to use a rebuild-value calculator, provided your home is of a standard size and construction.
Alternatively you could get a surveyor to give you a rebuild estimate.
Some policies will give you unlimited cover, but these could be more expensive: make sure you shop around to check.
The excess on your policy
The amount you’re willing to pay on each claim will raise or lower premiums. If you opt for a voluntary excess of £500, for example, your cost of cover will be lower than if you had a £50 excess.
With the higher excess, if you made a claim for £1,000, your insurer would only pay out £500. But this means that the potential costs to your provider are lower, hence cheaper premiums.
With some parts of your policy you may not be able to cut your excess (excesses for subsidence are usually much higher to reflect the greater costs in those claims).
The policy extras you choose
If you want to extend your cover so your home is protected against more than the basics, you’ll need pay more.
Here are some of the most popular extras;
Accidental damage cover - adding this to your contents policy will pay out if you spill wine on a new carpet, or your dog knocks over a precious vase.
Home emergency cover - as part of your buildings or contents cover, this gives you a 24-hour helpline to call if you have a problem such as a burst pipe or broken-down boiler.
Legal expenses cover - this will help fund legal action in a variety of circumstances, for example against dodgy workmen, or if one of your roof tiles comes off and damages your neighbour’s property. Legal expenses cover will also cover you if you need to take action against unfair dismissal from your job.
Other factors which will affect your home insurance premium are things like:
Where you live
Your postcode will also have a large impact on your premiums. If there is a record of an above-average level of burglaries, for example, this will push up the cost of contents insurance.
And if you live in an area which is considered at higher risk of flooding, you can expect to face higher buildings premiums.
Your home’s security
If you do face higher premiums due to an increased risk of burglary, you can cut costs by introducing decent security measures.
These could include locks on outside doors and patio windows which are made by to a standard recognised by insurers, or burglar alarms.
Who lives in your property
If you rent out the home you’re buying insurance for, you can expect insurance to be more expensive as you're likely to need a policy specifically for landlords.
Providers often believe that tenants are less likely to look after a property as well as its owners.
Your claims history
Customers who make claims normally see their premiums increase as a result. Insurers’ statistics show that if you’ve made a claim in the past, you’re more likely to claim in future.
If you’re considering making a claim, don’t just think about the excess you’ll have to pay. You could also face higher policy costs when it comes to renewal.