Montgomery Insurance Group, LLC Blog
We have focused this month on insurance rates. Why they change and what they include. We zeroed in on some things that affect auto insurance, but now let's shift gears to homeowners rates.
There are 5 main reasons why your homeowners premium can increase year over year. Of course these are not all the reasons, as rates are very complex, but these are the most common we see from day to day.
1. Loss of Discounts
Many carriers give discounts for newly constructed homes and newer roofs. Each year that your policy renews these discounts decrease as the home and roof age. Why you ask? Well as the home and roof age they become more susceptible to a loss than they are when they are newly constructed. Pipes age making them more risk to leaks and cracks, your water heater ages making it more prone to leaks from sudden discharge, and your roof ages making it more prone to have water leaks from rain and storms.
2. Inflation Guard That Increases the Amount of Coverage On Your Home
Some policies include protection against inflation of building costs. Year over year the cost to build a home will increase due to materials and cost of contract labor. To protect against this, the insurance carrier will increase the amount that your home is insured for to make sure that in the event of a total loss, you have ample coverage to rebuild the home.
3. Change In Insurance Score (Credit History)
As we have noted in previous blogs and our social media posts, your insurance score which consists of many things including your credit history, plays a big role in your rates. If you have opened new lines of credit or had any change that decreased your credit score, then more than likely you will see an increase in your homeowner's premium.
4. You Filed Several Small Claims Over The Year
Your homeowner's policy should not be used to file small incidental claims. Doing so multiple times in a year can actually hurt your rates. Make sure to consult with your agent before opening a claim to see if it is worth it to file or if it meets your deductible.
5. Natural Disaster In Your Area
When you live in an area that is constantly subject to natural disasters or heavy weather events such as tornadoes, hurricanes, wind storms and hail, you will typically be paying higher premiums to compensate for the risk of a claim in this area. Also, following a natural disaster you might see a spike in premium as the claims paid out are spread to the insured's in this area because the cost of repairs on homes from some of these disasters are steadily increasing.
If you notice these increases or changes in your rates become too expensive for your budget to tolerate, contact an independent agent like Montgomery Insurance Group that can shop for you and find a solution.