Increasing Homeowners Insurance premiums are affecting everyone, customers and agents alike. This month in Missouri, the average cost for a Homeowners Insurance policy with a $300,000 dwelling coverage limit is $2,084, about $186 per year less than the national average. We’ve been talking for over a year about the reasons behind higher insurance premiums, from climate change and natural disasters to rising building costs and higher claim payouts. The temptation to shop around for a new Homeowners Insurance provider is strong, and it can sometimes lead to a cheaper rate, but now, more than ever, we urge caution when shopping for quotes.
Apples to Apples
Getting quotes that match your current coverages is a given, right? But what if a company doesn’t offer a certain coverage, or only offers a much lower limit than what you currently have? It’s important to go line-by-line comparing quotes to your current Declarations Pages, and making sure you understand the ramifications of reducing or eliminating a coverage. More and more, companies are reducing their coverage options and the limits offered for coverages. Some coverages may not be particularly important to your specific home, but losing a vital coverage can have a huge impact if you need to file a claim.
The most common occurrence of discrepancies that we’re seeing between current policies and prospective new ones relates to roof coverage. Roofs can be covered for full Replacement Cost, Actual Cash Value, or Excluded from coverage entirely. Your existing policy may cover your 10-year-old roof at Replacement Cost, but another company may require Actual Cash Value on a 10-year-old roof for new business, or may reject the quote entirely if the roof is over 5 years old. It’s imperative that the quotes you’re comparing have accurate roof age information, and that you review replacement cost options specifically.
Call Before You Claim
Speaking of claims, an increase in claims frequency is another factor affecting insurance rates. Before filing a Homeowners Insurance claim, we recommend calling your agent and discussing the cause of loss, estimated repair, and if you’ve started mitigating future damages related to what happened. Your policy covers specific causes of loss, and if damages aren’t related to a covered loss, there might not be coverage. Having a claim on your insurance history, even if nothing was paid out, may still impact your renewal rate and rates for quotes from new companies. You also want to make sure that the potential payout from a claim makes financial sense once you factor in paying your deductible. If the total cost of a repair is $1,200, and your deductible is $1,000, does it really make sense to file a claim?
The Big “D”
We mean “Deductible”, not “Divorce!” Although after reading this, you may not want to break up with your current deductible.
For the past 15 years, the standard deductible for most Homeowners Insurance policies has been $1,000, maybe a little higher for Wind/Hail losses (the most common cause of loss we see in Mid-Missouri). In the past year, the insurance companies we partner with have changed their minimum deductibles to $2,500 or even $5,000 for new business. We’re also seeing more deductibles written as a percentage of the dwelling coverage (for a $300,000 dwelling, a 1% deductible would be $3,000).
While raising your deductible may save money on premium, consider how long it will take to make up for the potentially larger payout should you file a claim. And make sure that you have the value of your deductible in reserve at all times, so that you’ll be able to pay the portion of repairs that are your responsibility.
For the most part, $1,000 deductibles are being “grandfathered in” to existing Homeowners policies, though we have seen instances of renewals increasing minimum deductibles. Once you manually increase your deductibles, a lower deductible will no longer be an option on your existing policy.
Insure with the People You Trust
As with everything relating to insurance, the details of your Homeowners Insurance policy matter. The agents at Kasmann Insurance understand the pressures of trying to balance budget restrictions and coverage needs, and are always happy to review your policies, quote changes, or double-check quotes from competitors. It is a tough market out there right now, but we’re a small, client-focused independent insurance agency for a reason, and we’ll get through this together!