Factors Affecting Home Insurance Premium

You invest your life savings in purchasing a home which makes it very important to protect it with a home insurance policy. You also make sure that the premium amount fits your budget and you get the best coverage however, certain factors might increase or decrease your home insurance premium. Read on to learn about them.

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Your Locality

The first thing that affects the home insurance premium amount is the location of your house. It is because the insurance company sends an inspection team to your house before selling you the insurance plan.

 If you live in an area that is prone to theft or natural calamities such as floods, storms, etc. then the insurance premium will most likely be higher. Conversely, if your house is in a gated society and there is a 24 hours security facility then the premium amount will be comparatively lower.

Safety Measures That You Take

When you build or purchase a house, in order to protect it, you take all kinds of safety measures such as installing CCTV cameras, water sprinklers, smoke detectors, etc. So when you opt for the home insurance policy, the insurer takes these safety measures into consideration and the premium amount comes out lower.

However, if you do not take this kind of safety measure then the premium of your home insurance policy would be higher. This is why it is recommended to the buyer to take personal safety measures so that the calculated premium amount stays as low as possible.

If You Raise Claim

The purpose of purchasing an insurance policy is to be able to raise claims when required and get the specified compensation for the loss or damage. However, this can affect your insurance premium for the consecutive year and increase it. This happens as it leads your insurance company to believe the fact that you will most likely raise another claim in the future.

Natural Calamity Prone Area

Houses and apartments build near a river, ocean, or hill stations are usually prone to natural calamity. Let’s take Mumbai for example, it is almost every year when we get to hear the news related to heavy rainfall in Mumbai city as the streets get flooded causing damage to the houses.

This becomes one of the biggest reasons behind the high premium amount of your home insurance plan. However, you cannot control the natural calamity but if you wish to protect your house from severe damages then protecting it with home insurance is vital.

Deductible Amount

A deductible is an amount that you pay out of pocket when you raise a claim. This amount is decided at the time of purchasing the policy. This amount is decided by the Insurance Regulatory and Development Authority of India (IRDAI). However, you can choose a higher deductible amount that will eventually decrease the premium amount of your insurance policy.

It is recommended to keep the long-term investment in mind while choosing the deductible amount. As you might not want to pay the higher deductible amount due to other expenses as it might cross your budget in the future.

Cost of Construction

When you build a home, you use the best material to build it. However, if you do not plan to live in that particular house then the kind of material you use might not be that good. However, the cost of construction determines the insurance premium amount.

If you use the best material to build the house then the insurance premium would be lower and if you use bad quality material then the insurance premium amount would be higher. This is how the cost of construction plays the role in determining insurance premium amounts.

Riders You Choose To Purchase

Along with a home insurance policy the insurance companies also sell riders (Add-on) in case you want to enhance your home insurance coverage. It is not compulsory for the buyer to purchase the add-ons provided by the insurer.

However, if you choose to purchase different add-ons such as loss of rent cover, lock and key replacement, etc. to enhance the coverage of your home insurance then you will have to pay an extra amount that increases the premium amount of your policy.


These were some of the factors that would affect the insurance premium amount of your home insurance policy. Since it is easier to purchase the insurance policy now, you can design it as per your requirement by learning about the policy in detail online and not just this, you can also compare different plans and calculate the premium amount using the premium calculator tool online to check whether the premium amount fits your budget or not.




Written By: PolicyBazaar - Updated: 11 March 2022
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.