6 Main Factors for Your Property Insurance Premium - Chisa Coeg

6 Main Factors for Your Property Insurance Premium

When the plan to buy property insurance has risen to the top position on the priority list of shopping for your living needs and your family, your main focus will be on the amount of premium you have to pay.



You need to know and understand in advance what factors the insurance company determines to determine the amount of your property insurance premium rate.


Factors Affecting Premiums

The following is a review of some of the main factors that affect the amount of your property insurance premium.


Property asset value

The two most important factors in the calculation of property insurance, namely the multiplication of the level of insurance premiums and the total value of assets to be insured. The asset value of residential buildings and their contents is the total sum insured that you must submit to the insurance company. The total sum insured must be true and fair.


Pay attention! Do not set the sum insured of your property assets below the sum insured (under insured).


Things like that are often done with the motive to get a lower premium value but it will be fatal if there is a loss later. You will not get a full replacement because there will definitely be a pro-rated calculation that will be very burdensome for you financially.


The desired coverage area

The extent of the guarantee relates to the type of property insurance. Here are three types of insurance for your home or property.


Fire insurance which only covers the risk of fire due to fire, lightning, explosion, aircraft impact and smoke. This risk is known as FLEXAS.

Property All Risk Insurance, which provides a broader and comprehensive coverage guarantee because it almost covers all risks.

Earthquake Insurance which provides special coverage for risks, earthquakes, tsunamis, volcanic eruptions, and their various effects.

The amount of premium is proportional to the area of ​​the guarantee. Do simple research so you can determine the type of property insurance that best fits your profile needs.


The premium value can increase if there are extended coverage and other benefits that you want to add, such as additional coverage for life protection for you and your family.


Usage (Occupation)

The use of buildings is directly related to the type and level of risk to be faced. Therefore, the premium rate is also determined by the type of use.


Private residences, such as houses or apartments, certainly have a low premium level compared to commercial buildings, such as boarding houses, shop houses, and hotel or office buildings.


The top premium level is of course for industrial use, such as factories and warehouses.


So, you can expect to get a fairly low premium if your home is only used for private residence.


Types of building construction

The following is the division of construction types in home or property insurance.


  1. Class I building construction (non-flammable construction material).
  2. Class II building construction (construction material made of wood).
  3. Class III building construction (construction materials other than class I and II).

Class I building construction clearly has the lowest premium level, then class II building construction and subsequently, class III construction.


Pay attention to whether the type of construction of your entire house is only in the class I category or is there a combination of other types of construction materials, such as if your house has a bungalow made of bamboo / wood


Surrounding environment

The environment around your house or property that has the potential to provide a risk of loss will certainly increase the premium value. For example, if your house is in an area prone to disasters or security problems.


Ease of access and distance to the nearest water source can also determine the size of your home insurance premium. Seems trivial but quite decisive.


Other determining factors

Other factors that have an influence on your home insurance premium, including records of previous insurance losses or claims.


Furthermore, the availability of additional security equipment and systems, such as sprinklers, light fire extinguishers (APAR), smoke detection alarms or for security, surveillance cameras, and so on in your home.


These things can also affect the size of the premium.


The irony is that right now, you are busy equipping your house or property with all the tools and security systems but forget about insurance for the main protection of your property.


Not for Betting!

The desire to get a cheaper premium is a natural thing. However, if it makes the protection you get not optimal then it is not comparable.


This is the same as putting your home or property at risk. Don't make your home a bet to face danger.


Please pay attention to all of these factors before buying property insurance and get an appropriate and reasonable premium value.

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