A has a very good credit and has never raised claims for home insurance. Person B has a very good credit and has not made any claims on home insurance. Do you think a quote from the same company on home insurance would produce similar results, if not identical, right? Unless they get a quote in the same house at the same time, their prices are likely to be different. why is that? Why do home insurance rates look so random?
Home insurance rates are not actually random at all. Each insurance company conducting a business in Nevada must provide its classification structure with the Nevada Insurance Department. The Ministry of Interior can reject the classification structure if they consider it unfair or illegal. Once the classification system is adopted, the insurance company should apply the classification structure to all potential insurers equally.
So why random prices? Well, it seems to be random because there are many different factors involved in the classification of a home insurance policy. Here are some things you can use to evaluate a home insurance policy.
* Amount of Coverage: You may want to over-secure your home because you think it's better to be safe than sorry, but you have to pay overpayment for the coverage you don't need. Coverage affects the price with all insurance companies. Make sure you have enough coverage, but don't overdo it either.
* Local Fire Protection: If you have a voluntary fire station 20 miles away, you will pay a little more to secure your home due to increased risks. Many companies will not insure a home that has only a nearby voluntary fire station, limiting your options.
* Construction type: Whether you have a brick house or a house of plaster, the insurance company needs to know. Your insurance company also wants to know what kind of roof you have. Unwanted wood surfaces like concrete tile surfaces are shaking because they are slightly more flammable.
* House age: The older the house, the greater the likelihood of a claim. Thus, older homes usually cost more for insurance.
* Deductible amount: No matter who your insurance company is, the greater the discount, the lower the premium. Be sure to compare similar discounts when comparing policies.
* Discounts: Each insurance company will receive discounts, but not all are the same and not all are applied equally. One company may offer a 3% discount for a monitored alarm system, while another will offer a 5% discount. Check with your agent to make sure you get all the discounts you deserve.
* Insurance Points: Some companies will use what we like to call an "insurance score", which is based on your credit history. It's not the same FICO score that you use when getting a loan from your home, but it uses a lot of the same information.
* Claims record: Most people assume that their personal claims record is all that is calculated when the policy is categorized, but this is not always the case. If you are buying a new home, claims by previous owners on that house may affect your ability to obtain insurance from certain airlines.
As you can see, there are a lot of variables that go into the classification of a home insurance policy. What makes it more complicated is that each insurance company has different ways of applying different factors. Estimating prices can be a difficult task to say the least.