Rising Rates and How You Can Slow the Increase

Many homeowners around the nation are starting to see premium increases on their home insurance renewals. A recent catastrophe season with high losses and other factors are combining to generate rate increases for many homeowners. A recent story by The Arizona Republic points to increases for many homeowners in that state. To stay ahead of these price hikes, you should start doing some research on rates in your area and what you can do to potentially keep them at bay. If all insurers in your area are increasing rates, you cannot avoid being part of that business cycle. However, you can make adjustments to your policy to offset the costs and minimize the impact.

The first thing you should do is review your current home insurance policy and its coverages. Many homeowners have not carefully reviewed their policies since they first purchased the policy or, even worse, since they first purchased their home. The single largest component of your home insurance policy is the coverage for damage to your dwelling. If that is not valued correctly, you may not have enough or you may have too much insurance. Keep in mind that your policy should be based on the cost to replace or rebuild your home, not the market cost to purchase it. The market cost includes the cost of land, which is not insurable and can greatly inflate your premiums if included in the replacement cost. Another thing to consider is if construction costs have changed since you last reviewed your policy. Is your estimated replacement cost based on a different construction business environment? If so, you might be able to reduce it to current trends and save on some premium.

You should also review the deductibles on your policy. Many homeowners automatically select very low deductibles because they don’t like the idea of being out-of-pocket a large amount in the event of a claim. However, you should ask your insurance company for a comparison of the premium cost differences for each of the deductible levels they offer. You may be surprised by how much you are paying for a lower deductible. A good rule of thumb to consider when selecting a deductible is how much you can bear in out-of-pocket expenses without creating great financial hardship. For example, while you may not like the idea of paying $1,000 instead of $500 in the event of a claim, the additional $500 may still be something you can easily absorb. However, the cost savings from selecting the higher deductible may be quite substantial and it’s also fairly likely that you will not experience multiple losses in a single policy year.

It is always a good idea to inquire regularly about the discounts being offered by your home insurance company. These do tend to change over time so a discount that was not previously offered may now be available to you. Common discounts involve home improvements to secure your home against burglary and theft as well those that prevent fire and water damage. Sometimes something as simple as automatic water shut-off valves can save you quite a bit on your policy. The investment in these devices may be small, but the savings may be substantial. Additionally, some insurers may even be able to refer you to a particular vendor that can sell and install devices for you at a discount off the rate available to the general public.

The best way to avoid increases in any state- Pennsylvania, South Dakota, Virginia, West Virginia, Wyoming, etc. is to stay on top of your insurance policy. Knowing what you have and always inquiring about discounts can help keep your premium at a manageable level.

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