How your Premiums are calculated?
Why do insurance premiums increase?
When you receive your insurance renewal letter, you will notice your premiums – the money you pay to be insured – may have increased.
If your home insurance has increased while everything has stayed the same, you’ll probably be wondering why that is, says George Pipertzis, Assistant Director Product Pricing and Underwriting at DSH Insurance.
‘From the location of your home to construction type, several factors can affect your home building insurance premiums.’ says George.
DSH Insurance takes a range of factors into account, which may affect your premium:
- Your home – including the location, construction materials, the year your home was built and the type of building. If the home is located in a region prone to natural disasters or constructed of materials that presents a higher risk, the premium will be higher.
- The Sum Insured value – the higher the sum insured, the higher the premium.
- Your past claims experience – your premium may be lower if you have a good claims history but higher if you have made a number of claims in the past.
- Reinsurance costs - Reinsurance is insurance for insurance companies. DSH Insurance transfers some of the financial risk to global reinsurance companies’
- Home occupancy – if you are renting out your property, or your home is unoccupied for a certain amount of time, it may affect your premium.
‘Our approach to premium pricing ensures each policyholder is charged a premium which is in line with the level of risk of the policyholder and their property at address level. 'says George.
Why your premium may change
Sometimes premium prices will go up across the board, and sometimes your own premium might change because your level of risk has increased. Each time you renew your insurance, your premium is likely to change, even if your personal circumstances have not.
There are many factors that may change your premium in any given year, examples include the amount your building is insured for, inflation, your claims history, our accessibility to more accurate peril data, increases to repair and replacement costs.
Make sure you have the right cover
With the cost of living increasing, we’re all looking at ways to cut back and while it may be tempting to strip back your insurance cover, it's important to ensure you’ve got adequate cover should the unexpected happen.