5 Reasons Your Home Insurance Premiums Are Higher
It’s renewal time! Whenever your insurance is up for a renewal, there is always that slight anxiety before receiving your updated premiums. Is my insurance going to cost more? Will I be able to save a few bucks this year?
For many homeowners, the renewal of their home insurance has seen an increase in their premiums. Why is this? Are insurance companies just being greedy? Is the hard market really that bad? Have claims increased that much?
There are reasons that premiums are rising across the board. In some cases, not much can be done as pricing factors which set premiums fall outside the bounds of what an individual can do for cost savings. On the other hand, there are things that can be done to keep these premiums manageable.
If your home insurance premiums have increased, here are 5 reasons why – and some tips on what to do next.
1) Climate Change Is Real
The effects of climate change are being felt in almost every industry but especially so with insurance. The weather is getting more extreme more often; a combination that is proving to be devastating.
Wildfires, storms, destructive winds, tornadoes, and other such catastrophic weather-related events are occurring now more than ever before. The weather is colder, hotter, dryer, and wetter all at the same time. Heatwaves have only been interrupted by bouts of flooding so far this summer and that is an incredibly worrying sign.
Ultimately, this means that there are more claims to pay out for these weather related losses and therefore insurance companies are raising premiums to compensate for that.
2) Everything Costs More
Such is the state of the modern day – everything is more expensive than it used to be. Let’s say your house was damaged because of the weather. The emergency clean up services that might need to be called to the scene are more expensive, as are the costs to repair what was damaged. Everything from skilled trades to personal belongings have increased in price – meaning that cheap and cheerful is slowly turning into costly and miserable.
Moreover, this isn’t your run-of-the-mill inflation; the rising costs are substantial. Again, this means that when an insurance company pays out a claim, it pays out far more than it would before. Higher claim payments, then, lead to higher premiums.
3) Your Neighborhood Might Be Higher-Risk
Data is at the heart of everything these days and the insurance business is no different. Insurance companies now have a plethora of data available to them. They can use that data to capture trends and analytics from which they base their decisions. A wide range of statistics is used to determine how at-risk a neighbourhood is. In these circumstances, though it may not seem obvious at the surface, it may be possible at the neighbourhood you reside in has increased in risk-factor.
This could be down to anything from weather-related events to an increased likelihood of burglary. Different models are created to demonstrate how likely a house is to have some sort of claim depending on the area it’s in; and if your house happens to be in an area that is increasing in risk, your premiums will rise accordingly.
So far, these have all been reasons that nothing can really be done about. However, there are a couple reasons that premiums are rising that can be controlled.
4) Home Renovations
Renovating your house can be of the best parts of having a house. The added personal touch to turn your house into a home is one we all cherish. However, these renovations come at a cost. Finishing the basement and adding a gym or re-building a top of the line new kitchen are all things that will be beneficial in the long run to add value to your home.
This increase in value of your house will also reflect in an increase in the insurance premium as the cost to replace the new renovations at the time of a loss will be higher. It is a double edged sword but it isn’t all bad! There are a multitude of renovations that can be made that qualify the homeowner for a discount in their insurance.[JF1]
For example, upgrading your plumbing, installing a sump pump or backwater valve, or upgrading your electrical system are just some ways that will help you save on your premiums. These renovations reduce risk of flooding and fire. Ultimately, the safer your home, the lower your premium.
5) Claim History
Your premiums will always correlate with your claims. If you’ve had a few claims over a small period of time, insurance companies will increase your premiums to compensate.
On the other hand, going claim-less over a period of time qualifies many for discounts from their insurance providers. If you take good care of the house and make sure no claims need to be filed because of avoidable damage, then your premiums will begin to come down.
Home insurance can be quite tricky – the fine-print is rather boring; and, after all, who has the time these days to sit through page after page of a mind-numbing policy? This is why we take it upon ourselves to do that for you! Contact one of our licensed insurance advisors today at
Source: Economical