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What is a Homeowner's Insurance Premium?

Article Details
  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 01 February 2020
  • Copyright Protected:
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    Conjecture Corporation
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A homeowner's insurance premium is a payment to initiate an insurance policy or keep it in good standing. An insurance company usually bills yearly or every six months, depending on the terms of the policy. If the premium is not paid, the policy will lapse and the insurance company no longer extends coverage to the homeowner. In addition to premiums, customers may also be liable for deductibles in the event of a claim against the policy.

Homeowner's insurance is an insurance product to provide assistance with paying for losses, thefts, and damage. The type of coverage varies, and an insurance agent will discuss the options when a policy is written. This insurance does not cover damages caused by negligence on the part of the homeowner. The homeowner's insurance premium is due when the policy starts, and must be paid regularly to keep the policy active.

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The cost of a premium depends on a number of factors. One is the type of coverage. The more coverage people request, the higher the premium, particularly if people request a low deductible. Lowering the deductible can make it easier to afford repairs and other needs if damage does occur. It is advisable to think about how much money will be available to cover deductibles in the event of a crisis. Risks associated with the policy are also a factor. An insurance policy with flood coverage in a flood prone area will be more expensive than one in an area where floods are rare, as the insurance company is concerned about the likelihood of having to pay out on the policy.

Homeowners may be able to get a break on the homeowner's insurance premium in several ways. Many insurance companies offer discounts for people who agree to fit their homes with extra safety features, as these will reduce the risks of needing to make a payout. Bundled policies can also be cheaper. A person who buys life, home, and car insurance from the same company may get a discount price for buying all three products. The homeowner's insurance premium may also be reduced if someone has an excellent record with an insurance company, without any history of claims.

People who cannot afford the homeowner's insurance premium up front may be able to negotiate a payment plan. An insurance agent usually has the ability to accept a series of payments to cover the premium. Customers should be aware that payment plans usually come with fees, making it cheaper to pay all of the premium up front, if possible.

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