If You Don't Live Near Public Transport Stations, You Could Pay Less For Home Insurance
So many things in life are a trade-off between one thing and another
. While living near public transport and taxi ranks can be very convenient, it can also cost you money on your home insurance premiums! Usually insurance companies insurers look at every risk factor in your entire postcode, average out the likely cost to them, and calculate your home insurance premiums based on other people's risks, as well as your own. However, there is now a new breed of insurance companies using sophisticated technology break down risk according to individual (not aggregate) statistics. We look at how this methodology could save you money on your home and contents insurance.Why is living near public transport risky?
The answer lies in the amount of foot traffic that a particular commercial enterprise creates. Where there is public transport, there will be more people passing by close to a home, and greater potential for crime or damage. One of the factors that makes public transport stations and taxi ranks impact on risk profiles so much is the 'wait factor'. People not only go by - but they have to wait, sometimes for long periods, for a bus, train or taxi. And often this additional time gives rise to a greater opportunity to make trouble, unfortunately.
Criminology theory explains this especially well by noting that crime rates will be higher in areas where there is a confluence of motivated offenders, suitable targets, and a lack of capable guardians. Current research investigating routine activities illustrates that areas that are rich in suitable targets will experience higher rates of crime. Also, certain activities have been shown to be associated with certain criminal activities".
Aren't there other similar factors?
Yes! Being near a shopping center or a public park, being near a vacant block of land, being near a pokie venue, a business center, secondary school or university will also bump up premiums. Of course, if you're with a standard insurer, you won't even notice this phenomenon. Everybody in your postcode will share the cost, even though only some people carry the risk.
How risk is determined by your insurer
In the old days, people known as actuaries applied complex formulae to a given set of inputs (distance from train station, business of train station, known crimes committed at station, etc) to determine the likelihood of making a home insurance claim. A map showing areas of highest risk, delineated by curves was created - this is known as a risk contour map.
While that basis, the risk contour map, hasn't changed, technology means that it can be created at a much smaller level. Getting rid of the human factor in the equation and replacing them with software, means that home and contents insurance companies can get a fast, accurate idea of how likely any person is to claim on their insurance, based on environmental factors. Then they apply this to your premium, to get you the lowest possible quote . and also the fairest one!
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