Recently, there has been a lot of buzz about rising home insurance premiums, and unfortunately, the rumors are true. Some Insurance Companies have already taken the lead, increasing their premiums and minimum deductibles in an attempt to improve their numbers from previous years. Others have made announcements that the increases are pending or will be taking effect as of a certain date.
Although the rising home insurance premiums are inevitable, we wanted to provide you with some of the important reasons WHY they are increasing so that you have a better understanding of how this impacts you. As well, we thought it would be helpful to provide you with some recommendations on how you can minimize the impact of on your pocket book.
Top reasons for rising home insurance premiums:
- Inflation of labor and material costs from year to year (minor reason)
- Lower investment income for the Insurance Companies (minor reason)
- Increase in claims (major reason)
- Hail storm on August 12th, 2012
- Windstorm on November 27th, 2011
- Rise in water damage claims
As a reminder, Insurance is the losses of a few spread among the many. Therefore, the high amount of claim payouts in the last few years affects all of us even if we have not put a claim through ourselves.
Insurance Company reactions:
- Automatic increase in limits of insurance coverage each year
- Raising awareness on water loss prevention
- Increasing base deductibles to reduce the amount of smaller claims being put through
- Giving the option of excluding wind/hail damage coverage
- Having a higher deductible on wind/hail claims
- Increases in property insurance premiums
How we can assist you to reduce the impact of rising home insurance premiums:
- Review your Dwelling coverage to ensure that you are insured for the correct limit
- In some cases, this may warrant an increase in the limit of coverage required
- If the replacement cost is calculated as less than your current limit, the coverage can be reduced without losing Guaranteed Replacement
- Compare your existing policy with the coverage and rates available through our other markets
- Review the benefits and savings of increasing your deductible
- Review the discounts you are eligible for and suggest additional ones that may apply (ie combining your Home and Auto together)
- Look at adding a disappearing deductible endorsement if applicable/qualified
Hopefully you have found this information helpful with respect to your own home insurance policy. If you would like us to review your existing coverage and rates, we would be more than happy to do so and to offer you our recommendations on how you can minimize the impact of the rising home insurance premiums.
Thank you,
The Costen & Associates Team
