Happy New Year!!! May this year be the best yet of each of your lives.
I am sure with the passing of the Christmas season each of us is looking at the incoming bills and surprising ourselves as to how much we actually spent this holiday season. Among your bills some of you might notice that little insurance renewal notice that arrives just prior to your policy anniversary date. Your busy, but it strikes you as “higher, then I remembered” so you take the time to look and sure enough you recognize that the premium and especially the homeowners premium has jumped “a lot.”
You find yourself asking our question of the month:
“My homeowner’s insurance premium seems to have skyrocketed recently. What’s going on?”
It is true; homeowners insurance has been rising consistently the past 4 years, nationwide. Your homeowner’s premiums, which do vary dramatically from insurance company to insurance company, are driven by a variety of factors. One of the most important of which is your carrier’s loss history in the state and your county. If your company experienced a larger than average claim loss recently, they will re-rate their entire premium portfolio to try to make up for their losses and to a degree protect themselves from similar losses in the current or future years. All insurers operate with a cash reserve from which claims are paid. When that reserve is low relative to their projected claims they raise their rates to replenish their reserves.
However, each companies loss experience and reserve levels are different, based upon the location of their customers. So Company A, might have traditionally been very competitive on their homeowners premium relative to Company B. But the last few years there have been several hail storms in the area and Company A might have a large amount of customers in the areas most affected. So they have a larger amount of claims. This drains their loss reserves and they are forced to raise rates to maintain the overall health of their company.
Meanwhile company B’s customers may have largely been missed by the storms and therefore they had little or no increase in claims. They therefore have no need to raise their premiums relates to these factors.
I have worked with people this past year who have seen their existing carrier raise their premiums from 40%-100% in just the last 2 years alone. Fortunately, our company has not had to raise premiums anywhere near that amount.
While it is true that overall, home insurance premiums are rising, if you are seeing large increases, it might be wise to at least investigate what other carriers are offering. You might be surprised at the differences you find.