Insurance policies come with a lot of lingo to learn. One important term to understand is “premium.” Simply put, an insurance premium is the amount of money the company will charge for the plan. However, it’s a bit more complicated than that; two people applying for similar policies may be charged radically different amounts. When shopping for plans, work with a qualified insurance company in Peoria, AZ, to ensure you get the best price possible.
How Premiums Are Calculated
Four core components go into calculating your premium: what kind of coverage you’re receiving, how much coverage you’re receiving, your personal information, and local competition.
Insurance coverage comes in many forms, and those forms have different price tags attached. For example, an all-risk home insurance policy will come with a higher premium than a named-perils policy. Likewise, it’s common sense that an insurance company will charge more for more coverage.
The impact of your personal information and your location is where things really get complicated. Everything from your age and occupation to prior claims history and address can affect the premium quotes you receive. Since every company weighs these factors differently, it’s crucial to shop around instead of accepting the first premium you’re offered.