Which factors can lead to higher homeowners insurance rates?
Now that 2020 is here, you may be getting ready to renew your homeowners insurance. Leading up to your renewal period, your insurance provider will give you a summary of your coverage and alert you to any premium changes. If your premiums have gone up, there are many reasons that can explain the increase. Here are some of the factors that can result in home insurance premium increases.
Factors that You Can Control
Leading up to your policy renewal, your home insurance provider will look at any changes that you have made that could increase your risk or lead to increased coverage needs. For instance, these factors will result in increases in your home insurance rates:
- Home Updates or Renovations– If you have recently completed home renovations or updates that increased the value of your property, you may have to increase your home insurance coverage limits accordingly. More coverage means higher premiums, so this could explain why your premiums have increased.
- Changes in Your Claims History– If you have recently filed home insurance claims, then your rates will increase depending on the type and cost of the claim filed. Fortunately, you can once again gain access to lower insurance rates if you manage to stay claim-free for an extended period of time.
Factors Outside of Your Control
Sometimes, your insurance premiums go up as a result of things that you simply cannot control. Some of the major factors affecting homeowners today include the following:
- Frequency of Extreme Weather Events– In recent years, the number of wildfires, windstorms, hurricanes, tornadoes, and other extreme weather events have increased significantly. As the frequency of these damaging events increases, insurance companies must increase their rates so that they can keep up with resulting home insurance claims.
- Local Crime Rate– When calculating your premiums, your home insurance provider will look at the local crime rate to determine how likely you are to become a victim of theft or vandalism. If your local crime rate has increased over the past year, then your insurer will consider you a higher risk to insure. As such, they will also increase your premiums.
- Cost of Repairs and Replacements– As the cost of emergency cleanup services, skilled trades, personal belongings, and home values increase, so does the amount of money that insurance companies have to pay to address policyholder claims. Insurance companies will increase policy premiums to offset the higher cost of claims.
These are some of the major factors that can cause your home insurance premiums to increase. Do you have more questions about your homeowners insurance? If so, then contact the experts at CIA Insurance and Risk Management. We are ready to assist you with all your insurance needs today.
Post written by Sam Crudo, Chief Executive Officer
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