7 Reasons Why Your Homeowners Insurance Rates Increase
A renewal notice comes in the mail, indicating a rate increase for your homeowners insurance policy. This situation is to be expected to a certain extent. Rates go up a bit, although never at the same pace auto insurance does.
However, a major jump is concerning. Typically, any increase should amount to only a few dollars per month, but if it exceeds this limit, one or more of the following factors may be the cause:
You’re Buying New Things
When you add items to your property, rates may go up. The increase is often more pronounced when you purchase a high-dollar or high-risk item, such as a brand new car, a trampoline, or a swimming pool.
Renovations
Homeowners insurance factors in your property’s square feet. Improvements, renovations, and new buildings add more square feet to the initial amount. As a result, your property value goes up – and, in the future, repairs may cost more.
Additionally, insurance companies consider the current cost of making repairs. Construction rates and building materials follow the pace of with inflation, and your premiums, in response, reflect these changes.
What can you do? Experts say to upgrade your coverage, so, for those potential damages in the future, you have enough to pay for fixing the damage.
Your Credit Score
A negative change to your credit score – especially if a sudden drop occurs – impacts your insurance rates. The insurance company notices the shift and, with renewal, updates your rates in response.
Want to lower your rates? It’s advised to work on your credit first, and your insurance will slowly reflect the positive changes.
You File Several Small Claims
As a rule, your policy should not be used for routine maintenance. Yet, some homeowners fall back on it to repair minor damage – and do so repeatedly. A $100 claim here and there starts to add up, and the insurance company takes note, increasing rates in response.
Rising Crime in Your Area
When the area surrounding your home experiences a spike in crime, your rates reflect this change.
Natural Disasters
Areas regularly struck by natural disasters – tornadoes, hurricanes, floods, and fires – often require higher insurance premiums. Beyond this factor, what many homeowners don’t realize is, the destruction and resulting costs have increased over the past decade, especially compared to the past 40 years. Your insurance company considers this progression when setting your policy’s rates.
More Inclusive
While an individual homeowner may opt for a rider, increasing his or her policy as a result, a shift has occurred in general in recent years. That is, more policies now tend to be “special form” – providing more coverage and offering greater replacement costs. Essentially, as a rule, the more you want to cover, the higher your premiums end up.
Higher premiums, however, may be a sign you may need to start shopping around for new homeowners insurance. Look at rates and coverage and compare your options with an independent agent like Ion Insurance.
