Home insurance premiums have been rising because insurance claims have spiked in recent years as homeowners seek to recoup losses due to a preponderance of adverse climatic conditions.
About home insurance there are some things you must know, information that can help you contain your costs and lower your premiums.
Risk Factors
Many consumers take it personally when their home insurance rates rise. What you should know is that insurance is based on risk and to insurance companies you are a statistic within the greater scheme of insuring. That does not mean you cannot get individual service, but it does explain that rate increases are generally out of your control.
There are certain risk factors, however, that you can control. These include the type of job you hold, how much home you own and the location of that home. Sure, you cannot physically move your home, but you can also decide what sort of renovations you plan to complete that will also drive up your insurance premiums.
Building Costs
Homeowners sometimes make a mistake by getting too much insurance. Instead of insuring the home and surrounding buildings alone, they will seek coverage that rivals the value of their property.
That $500,000 property you own may include a house worth just $100,000. Know that land prices should be subtracted from the cost to find your insurable amount. In this extreme case, the homeowner may be insured for five times what his structure is worth.
Service Please
Consumers can look at price and figure that obtaining the lowest price is the best option. Low price, however, does not ensure reliable service, especially in an emergency.
You need to compare prices, but you should also compare service. If you are dealing with an insurer by online means only, can you still get in touch with an agent immediately? Also, what is the company’s reputation for responding to claims? They may do well individually, but when a disaster hits will the response be satisfactory? Learn about the company’s financial stability too — can it handle the big hits that follow a natural disaster?
Your Coverage
Beyond your home and its out buildings, what is covered? Content is the next most important matter after the structure itself. You need to make sure that your possessions are adequately covered in the event of total loss such as from a fire.
Homeowners should get the right amount of coverage and take pictures of what they own. Those pictures can be stored by uploading them to a cloud based storage and retrieved as needed. Other important documents can be stored there too. You may need to get a rider to coverage that expensive coin collection, that rare jewelry or unusual artwork.
Filing Claims
Every insurance company ad that you see gives consumers the impression that the insurance company is their friend. Were that always so — there are times that you may have to fight for what you should get.
You may need to prove your losses especially if the compensation for your claim comes in for less than what you expect. Before you file a claim, carefully illustrate your losses. Essentially, you are pitching your claim in hopes that the insurer will accept it. Do not exaggerate, but be careful that you do not under report your losses just the same.
Your Policy
When was the last time you reviewed your homeowners insurance policy? It may have been several years and there could have been changes to your coverage that kicked in without your knowing it.
Make a point to sit down and review your policy. If you have been with the same insurer for several years and still have copies of your older policies, compare the changes made. Your insurer will automatically adjust your home’s value, but make sure that it accurately reflects what it is worth. If you are not sure what the replacement cost would be if you were to experience total loss, then hire a builder to provide an estimate for you.
References
Insurance Journal: Homeowners Insurance Claims Cost Rising Rapidly: Study — http://www.insurancejournal.com/news/national/2012/09/26/264398.htm
CNN: Tips on Homeowners Insurance — http://money.cnn.com/magazines/moneymag/money101/lesson19/
Author Information
Stephen Catalano is a retired home insurance agent. He enjoys sharing his insider knowledge online by blogging. Get home insurance rates from homeinsurance.com
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