You’ve been a loyal customer for years now, so why is your insurance company raising your homeowners’ insurance rates? You haven’t filed a claim or missed a payment, so what’s the deal? Well, it’s not you, it’s your insurance company. The hike in your insurance premiums is the result of homeowners filing extensive insurance claims after 2015’s massive winter storms and the insurance industry trying to keep its head above water.
The Rise in Premiums
According to the Boston Globe, 2015’s record-breaking snowfall, the snowfall that caused massive damage to structural walls and roofs, resulted in hundreds of thousands of claims being filed. Insurance companies had to pay more than $1 billion in claims in the state of Massachusetts alone. That’s right: that massive payout was for one state.
As a direct result of the loss, the insurance industry decided to raise homeowners’ insurance premium prices to make up for 2015’s winter storms and to prepare for 2016’s. Insurance, like it or not, is a business. To maintain its financial prowess, the industry had to adjust some of its pricing. Remember, and this is easily forgotten, homeowners’ insurance is about risk. If it has been determined that your home is at greater risk of loss than it has been previously, your insurance costs will rise. Insurance companies are trying to “weather the storm” before it’s even hit. If one state cost the insurance industry over a billion dollars in claims, they’re going to try and make up for it.
For example, if you live in a storm-prone area, you have more than likely experienced a significant hike in your homeowner’s insurance rates. As of 2015 (the most recent data available) the 10 states with the highest premium rates are:
Average Premium Rate: $2,084
Average Premium Rate: $1,742
Average Premium Rate: $1,551
Average Premium Rate: $1,501
Average Premium Rate: $1,314
Average Premium Rate: $1,248
- Rhode Island
Average Premium Rate: $1,233
Average Premium Rate: $1,213
Average Premium Rate: $1,160
- New York
Average Premium Rate: $1,158
Do you notice something about the 10 states listed above? They all get hit with the country’s most severe winter storms. States that are most impacted by weather conditions are also the hardest hit by premium hikes. The average homeowners’ insurance premium costs between $300-$700. The states listed above are paying double that.
The Rise in Premiums: Continued
It doesn’t help that the insurance industry routinely raises the cost of insurance premiums. In 2013, the average homeowners’ insurance premium rose by 6 percent, following a 5.6 percentage hike in 2012.
The reason we invest in homeowners’ insurance is to prepare for the unknowable, such as if a winter storm should down a tree on our property, wiping out our roof, or if a burglar should steal the kids’ brand new PS4 wrapped up in a big red bow under the tree. Insurance is a failsafe; if something bad happens, we’ll be covered. But if the coverage is too expensive, what then?
Lowering Your Monthly Statement
There are ways to lower your insurance premiums. Comparing homeowners’ insurance rates with sites like CoverHound is a good bet to get a lower rate than you’re currently paying your insurance company.
If you’re not quite ready to call it quits on your insurance agent, ask about discounts, they’ll be able to find some for you. If they say there are no available discounts, tell them about the discounts you get online with other insurers, believe me, they’ll buckle under pressure. If all else fails, raise your deductible. When you’re willing to pay for more out of pocket, the insurance company is more willing to approve your claim.
Insurance isn’t anyone’s favorite service until they need it. Make sure you have insurance; it’ll be there when you need it most.
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