Recently there has been a lot of concern about rising home insurance premiums. Some homeowner’s premiums have increased as much as 30%, even without a claim being made in the previous year. Don’t get stuck with a ridiculous rate. Believe it or not, there are answers to the home insurance blues.
Why are rates on the rise?
Usually, when insurance premium rates rise, it’s because a claim has recently been made. But rates have been rising in incidences where no claims have been made at all. Why is this happening?
Insurance companies blame wind and water damage due to climate change for the increases. According to a CBC news article, nationwide insurance payouts in 2009 totalled $5.3 billion, and more than half of those were claims paid out for extreme weather events. Of those, heavy rainfall claims were the most common.
Fire damage used to be the highest cost for insurance companies, said a spokesperson for the Insurance Bureau of Canada, but that all started to change approximately 10 years ago when water damage claims started to rise. With the recent events in Japan, the potentially high cost of climate change and natural disasters must be even more apparent to home insurers.
What can you do?
If you are seriously considering buying a new home, it’s always a good idea to have your insurance agent look over the home inspector’s report. The home that you’re interested in may be located in an area that is susceptible to water damage, or frequent claims may have been made in the past. Either way, these kinds of things can lead to higher rates. It’s always good to know what to expect before making a final decision. Here are a couple of tips to help minimize insurance claim risks:
Water damage costs can be high. To learn more about how water can damage your home and what it could cost your wallet, show your home inspection report to your insurer.
An accident may be just an accident, but you’re still liable. Look into how you can minimize potential hazards on your property. If your pavement is uneven it could potentially cause a nasty fall. Likewise, an unfenced pool can also be dangerous. The more hazards there are, the more your liability protection will cost you.
Install an alarm system. Not only will an alarm system give you and your family added protection, insurance companies often offer discounts on your home insurance premiums for alarm installation.
Home improvements can add to the overall value of your home. Make sure that your insurance policy adequately reflects the increased replacement coverage cost.
Location, location, location. Your home insurer can most likely tell you, based on where you live, whether or not you need additional coverage to make sure that you are adequately protected.
Looking for a new rate?
If you feel that your rate is unjustifiably high, there are some things you can do. Start by calling an insurance broker. Go online and get a quote from a company that deals directly with the public. Use social media utilities, such as Facebook or Twitter, to seek out better deals. Or, use a comparison website to get a quote.
Believe it or not, you are not obligated to stay with your current company and there are no rules to stop you from moving from one company to another. Unlike most phone companies, you cannot be penalized for leaving.
The only downside to frequently switching companies is that you may lose out on the client service that comes with customer loyalty, but sometimes that’s a small price to pay to potentially save hundreds of dollars.
The challenge in comparing costs is that home insurance coverage is not standardized. This doesn’t make for quick and easy comparisons. Here is a guide of a few things to pay attention to:
Liability: Coverage of $1-million is usually enough.
Coverage levels: The best policies cover all risks, except for a few situations. You can purchase separate ‘optional’ coverage for things like earthquakes, sewer back-up and furnace oil spills. Other policies will only cover risks that are specifically named. Be sure to read the fine print because some also include ‘uninsurable perils.’ For example, if you build your house on a flood plain, chances are you will have a flood at some point in the future. The damage caused by this flood is uninsurable.
Replacement costs: Just in case your home were to get levelled, you should always make sure that your policy doesn’t place a limit on the cost of rebuilding it.
Sewer back-up and water damage: Since this is the main reason for rate increases, it’s always a good idea to know just what you’re covered for. Sewer back-up is usually optional and paid for separately.
Insurance companies aren’t doing a heck of a lot to earn your loyalty, so there’s really nothing stopping you from shopping around. Don’t get stuck with a bad rate.
If you are uncertain about anything, an insurance expert is just a phone call away. Take advantage of their knowledge and expertise.
