There are many types of assets in our possession. Our home is the most precious among them. We try our best to protect it. This is the reason people buy homeowners insurance. Homeowners insurance acts a protective shield for our beloved home. Our home can be damaged by natural disasters or accidents like fire or utility failure. Like any other property insurance, home insurance provides necessary coverage in case of any physical damage to our home. But recent statistics shows that homeowners insurance premium is increasing in an accelerating rate. This might be a bad news to the people who are just about to buy homeowners insurance. But there are many ways you can lower your premium to make it affordable. But, at first let’s discuss why your homeowners insurance premium might be increasing.
Why is your homeowners insurance premium rising?
Here are some major causes for the increase of homeowners insurance costs:
- If your home gets old, your premium is likely to increase. Why is that? As your home gets old, the probability of an immediate damage increases. When your home gets old, the accessories and adjustments also gets old. For example, if the roof is made of concrete, its strength decreases over time and the probability of a crack due to rust in the reinforcement steel or earthquake increases. Similarly, utilities like electricity, gas & water supply lines or an HVAC system in your house are installed when you have just moved in. The probability of accidents caused by utility failure or the failure of the HVAC system is also high when your house gets old. This causes your premium to rise.
- The place you live in, the place your home is situated doesn’t change. But the weather pattern or the flood map isn’t always the same. As the time goes, these maps changes and might turn your living area into more risk-prone area to the eye of your insurance company. This also causes the higher premium rate.
- Home insurance carriers also consider the crime rates of a certain area to assess premiums. If the crime rate of your area increases, this has an impact over your insurance premium.
- As the time passes, the building construction costs increases. This is because the construction materials such as brick, cement, rod, sand, construction machineries etc. are very expensive at present and most probably the costs are higher than ever before. The labor charge is also high nowadays. That is why homeowners insurance premium is also rising up to provide coverage for potential damages as well as to keep up with the price hike.
- Lower credit record always causes bad impressions. The insurance companies are lesser interested in those people who have low credit score. If you don’t pay up your bills in time and if you don’t clear your debts, your credit score won’t impress the insurer. This will lead you to face a bigger insurance premium than you have expected.
- There are certain ways by which you can upgrade your home. For example, you have just painted your home with an exclusive color. Or you have added some extra features to your home. These things will lead you to face higher premiums. By the way, you must notify your insurer about the upgrade. Otherwise the company will deny these upgrades at the time you claim the coverage.
- If some risk factors are added, the premium will rise up. For example, if you add a swimming pool, or make a rooftop garden, these will increase the risk factors, as well as the insurance premium.
How to prevent the higher homeowners insurance premium?
- The first suggestion is that, you should increase the deductibles in your home insurance. In this way, you might have to pay more than the usual when you claim. But this will reduce the premium.
- If you install some protections for your home, the premium will decrease. What type of protections are we talking about? For example, you can add some extra beams or columns to your home for more protection from earthquakes.
- Take good time to count all of your insurance covered properties. Do not keep all kinds of coverage. This will cause you to face a higher premium. Don’t request for insurance coverages for very old houses or a very old truck. This will cause unnecessary premiums. For calculations about risk values, you might think about taking help from an expert.
- Another important suggestion is to minimize your claims. Do not claim frequently. This will make your insurer force you into a bigger premium.
- Improve the security of your home. Notify your insurer about it. Most companies offer attractive discounts on security installments. Follow the company guidelines and secure your insurance discounts.
- Good credit scores are very beneficial for you. If you have a good credit score, you will get the advantages of discounts and lower insurance premiums.
- Take the necessary safety measures. Such as the fire extinguisher or circuit breakers. These type protections will also reduce the home insurance premium.
