What Is Homeowners Insurance Based On?

  1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    The actuary is a person in an insurance company that compiles mountains of data from previous claims.  From this information they develop a “standard” rate.  The underwriter is a person in the insurance company that reviews the application to see if it meets the requirement of the standard rate.  The underwriter may adjust the rate further or decline a home based upon their review.  The standard rate is based on the location of the dwelling, the construction of the dwelling, the cost to replace the dwelling, and the presence of unusual hazards (trampolines, swimming pools and derelict autos.)  One factor that few consider is the presence of a pet.   Some pets have a statistically significant risk of lawsuit.  Another hazard is the placement of an evaporative cooler.  When they are located on the roof they frequently result in water damage claims.  Another consideration is the pitch of the roof.  As you can see there are a number of variables that the underwriter must consider.  That is why they frequently request photographs of the house. 
    Answered on March 18, 2014
    flag this answer
    2. Did you find these answers helpful?
    Yes
    No
    Go!

Add Your Answer To This Question

You must be logged in to add your answer.


<< Previous Question
Questions Home
Next Question >>