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6 Key Factors for Your Property Insurance Premium

Posted At November 13th, 2019

6 Key Factors for Your Property Insurance Premium

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

You need to know and understand in advance what factors are used as the basis for determining the insurance to determine the amount of your property insurance premiums.

Factors Affecting Premiums

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

Value of property assets

The two most important factors in the calculation of property insurance, namely the multiplication between the level of insurance premiums and the total value of the assets to be insured. The value of residential property assets and their contents is the total value of the coverage you must submit to the insurance. The total value of the coverage must be true and reasonable.

Pay attention! Do not set the coverage value of your property assets under the insurance coverage that should be (underinsured).

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 reimbursement because there will definitely be a pro-rata calculation that will cost you a fortune.

Desired guarantee area

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

  1. Fire Insurance only guarantees the risk of fire due to fire, lightning, explosion, aircraft impact, and smoke. This risk is known as FLEXAS.
  2. Property All Risk Insurance that provides a wider and comprehensive protection guarantee because it almost guarantees all risks.
  3. Earthquake Insurance that provides special guarantees for risks, earthquakes, tsunamis, volcanic eruptions, and various effects.

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

The premium value can increase if there is an expansion of collateral and other benefits you want to add, such as additional guarantees for life protection for you and your family.


The use of the building is dealing directly with the type and level of risk that will be faced. Therefore, the level of premium is also determined by the type of use.

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

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

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

Types of building construction

The following is the distribution of types of construction on the home or property insurance.

  1. Class I building construction (non-flammable construction material).
  2. Class II building construction (construction materials 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 than class II building construction and subsequently, class III construction.

Note, whether the type of construction of your entire building is only included 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 a high potential risk of loss will certainly increase the value of the premium. For example, if your home is in an area prone to disasters or security disturbances.

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

Other determining factors

Other factors that have an influence on your home insurance premium, include a record of losses or insurance claims that have occurred.

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

These things can also affect the amount of the premium.

The irony is that right now, you are busy to equip your house or property with all of these tools and security systems but instead 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 obtained is 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 the appropriate and reasonable premium value.

Bandingin.com !!! can help you make smart and accurate insurance decisions to protect yourself, your family and your future.

Topics Article

property insurance insurance premium asset protection