Home insurance can be complicated and it’s tricky to know exactly what factors impact the premium you pay. 

But when you’re paying potentially thousands of dollars a year on a policy, it’s important to know where your money’s going.

Here are six things that can affect your home insurance premium.

Crime rate 

This makes a lot of sense when you think about it.

If you live in an area with a high crime rate then naturally there’s a higher chance of your house being broken into or vandalised.

Because of this, there’s a higher chance you’d need to make an insurance claim, and therefore a higher chance your insurer will need to pay for the damage.

This means that policyholders who live in higher crime rate areas typically pay for more expensive premiums.

Proximity to public transport 

Along similar lines, people that live near train stations or major bus stops are more likely to see crime.

This is because it’s easy for someone to hop off a train, break into your house while you’re at work, and then jump back on the train.

So public transport or other types of public thoroughfare can also impact the price of home insurance.

Your home security 

The more you show your insurer that your home is secure, the more they will reward you with cheaper premiums.

On the flipside, if your home lacks security and is easy to break into, of course you’ll have to pay more.

Installing security cameras, alarm systems, gates, deadbolts and even a garage door (as opposed to a carport) can all help lower the cost of your premium.

Other policies

If you have a car insurance and a home insurance policy through the same insurer, you should be eligible for cheaper premiums.

This shows brand loyalty so typically you’ll be rewarded through discounts.

Multi-policy discounts are common across most insurers in Australia so do your research and check whether you’re eligible for a lower price.

The value of your house

Naturally if your house is worth more, your home insurance policy will cost more – and vice versa.

When you take out your policy, the value of the policy or the home will typically be referred to as the “sum insured”.

However, you can lower this to be less than what your house is actually worth. It just means that if your home burns down and you need to replace the whole thing, you won’t receive a payout as large as its value, and will have to make up the additional cost.

Natural disasters

Do you live near a waterway, bushland or ocean?

If so, you probably pay more for your insurance.

This is because natural disasters are unpredictable but often strike close to these three things.

Flash flooding can take place in waterways like rivers and streams.

Bushland also leads to bushfires, and homes near oceans are typically affected by storm surges.

If you do live near one of these things, take a look at the fine print of your policy as you may not even be able to receive cover.

Home insurance isn’t as scary or as complicated as it may seem, but it’s important to do your research and read the fine print of your policy.

Chances are you could be paying too much.

If you think you’re being overcharged, compare policies online and consider a switch.

Richard Laycock is an insurance expert at finder.com.au

Read more: propertyupdate.com.au