The amount of insurance premium is affected by many factors.Â One of these is the level of risk associated by insurance companies with the client.Â The perception of risk need not even be actual since certain preconceived conditions can dictate how insurance premium rates will be computed.
Let us consider the case of home insurance.Â Clients who are 50 years old and over are considered low risk compared to those insured belonging to a younger group.Â These people are generally seen as safe, mature and responsible and therefore offer more assurance against claims arising from negligence.Â They are therefore rewarded with better rates for insurance policies. These people become more attractive to insurance companies when they reside on low risk areas as well.Â Lesser risk is always a plus factor when it comes to insurance concerns.
The reason people are willing to pay for insurance is to have the advantage of protection.Â Insurance companies are willing to provide this protection for a price.Â The price will vary depending on the risk involved. Â The logic is quite simple.Â The more probability an insurance company will have to pay a claim, the higher the insurance premiums involved.
This is why there are homes that are considered uninsurable or homes which are rejected by insurance companies for coverage.Â Although these are not many, it calls attention to the fact that it is possible.Â Â Uninsurable homes are typically found in high-risk areas for terrorism, natural calamities, and crime.Â The risk placed in relation to a specific area usually depends on the number of claims made within the area.Â Even inquiries with regards to possible damages raise the antenna of insurance companies in determining whether a specific area is high risk or not.Â Numerous small claims in an area are not viewedÂ favorablyÂ by insurance companies since it is a form of alert of an existing problem in the area.Â It is one way of calculating risk.
Being categorized as high risk by insurance companies may come about due to credit history, frequent insurance claims within the area, and the physical condition and location of the house.Â The good thing about this is that such reasons can be resolved with the right action.Â Aside from the location of the house where nothing can be done, the other reasons can be addressed although it may take some time.
About the Guest Blogger
Samantha advises readers to check on Home Insurance rates as seen on Insurance Town.Â She is a former resident of a categorized high risk area in Florida.