Why Your Home Insurance Premiums Increase and What to Do About It
Over one-third of Americans see an increase in their home insurance premiums every year, but a lot of these people don’t know why they’re paying more. Here at Obrella, we don’t think insurance should be such a mystery. We want you to be informed and understand why home insurance premiums can increase. And, we won’t stop there. We’ll also give you several ways you can save on your home insurance.
Why Premiums May Increase
If you add a property or another family member to a policy, you expect the policy fees to increase, but if you don’t, you may be shocked to see the price on your bill rise. There are three main causes for why home insurance premiums increase that you should be aware of.
- Mother Nature: With tornadoes, earthquakes and all manner of other natural disasters, insurance companies have to pay out their due portions and the last decade has been one of the worst in U.S. history for natural disasters. Even if your home is spared from the destruction left in a tornado’s path, you may still see an increase in your monthly bill. The insurance companies may have to pull a little from everyone to balance all of the claims they’ve received.
- Wall Street Woes: Instead of saving your premiums for that fateful rainy day, insurance companies take your money and invest it in the stock market. When the stock market doesn’t return their investment, they need to get money back in their pockets, so they can bump up premium costs.
- Older and Higher: Every year your property gets older and this can work against you. Insurance companies know that older homes come with problems and needed repairs and they can increase the insurance for properties that are 25 years or older. Insurance companies are leery of plumbing or electrical that is past a quarter century and will see that as a high risk, which means higher premiums.
How You Can Save Money
Unfortunately you can’t always control the reasons above. You don’t have a say in how the stock market plays out, or how often Mother Nature strikes. Fortunately, there are things within your power. Here are five ways you can offset any possible increases.
- Bundle: One of the easiest ways to save money and time is to bundle. Instead of having separate insurance companies for your home, car and other needs, lump them all together. Most insurance companies will give you a discount when you do this, and you won’t have the hassle of tracking down different companies/policies/agents for different properties.
- Speak Up: Don’t be afraid to ask for discounts. Often times, insurance companies will have specials, like savings for students with good grades, safe drivers and more. Sometimes you’ll miss hearing about them, especially if they aren’t advertised too heavily.
- Increase Deductibles: If you can afford it, increase your deductibles. Some people will never need to make a claim, and see it as a risk they’d rather take. Some would rather pay the high deductible if and when the time comes, versus paying a regular high premium.
- Watch Fees: If you pay semi-annually or any other shorter time frames, it’s easier for insurance companies to sneak in small increases. It’s harder to notice the increase when it’s broken out into manageable chunks instead of one large installment, like you’d see in a yearly policy. Keep track of how much you’re paying and if it starts to climb.
- Shop Around: While some factors can’t be helped, like Mother Nature disasters, there are still enough companies vying for business that you can play this to your advantage. If you’re not happy with one insurance company’s prices, either move to another, or inform your current agency of the deals you’ve found elsewhere and see if they’ll match it. Many insurance agencies count on people not wanting to move around and may take your business for granted—don’t let them.
If you’d like help finding the right policy for you at a price you’re happy with, let Obrella help you. Call one of our professional agents today and we’ll help you find a home insurance company that will provide you the coverage you need at an affordable price.