Temperatures aren’t the only things on the rise this summer. Homeowners insurance rates are also going up, according to the latest data from the National Association of Insurance Commissioners, which reports that the cost of homeowners insurance increased 36 percent between 2003 and 2010 — nearly double the rate of inflation.
The states most affected are the 14 that border the Atlantic Ocean or Gulf of Mexico, where rates crept up 44 percent (91 percent in Florida).
Alex Tsetsenekos, vice president and general manager of homeowners insurance for LexisNexis Risk Solutions in Alpharetta, Ga., says the rate spikes are caused by several factors, including “unanticipated losses from various weather-related events such as tornadoes, wind, hail and flash flooding in areas not previously prone to these losses.”
Insurance companies also have seen less investment income due to monetary policy following the recession, Tsetsenekos adds, so they had a harder time offsetting those losses.
To avoid higher premiums, Aaron Nicklay, agent with Farmers Insurance in Bloomington, Minn., recommends that homeowners meet with their insurance agent annually to review their coverage and explore their eligibility for different discounts.
“Make sure [your coverage] is sufficient and up to date with any upgrades or changes made in the past year. Set your deductible at a reasonable level for you, and consider splitting your deductible: $1,500 for wind and hail damage and $500 or $1,000 for all other perils will help save you money on your premium,” Nicklay says.
Here are other ways to lower a homeowners insurance premium:
Replace an older roof, which can keep insurance premiums low for years to come.
Set up individual policies for boats, trailers and recreational vehicles – do not include them on the home’s insurance.
Improve your credit score, which is used to help establish premiums in many states.
Homeowners insurance is designed for large-scale disasters, so avoid filing any damage claims for small problems. “These things will cost you more in the long run if a claim is filed than if you had just taken care of them yourself,” Nicklay says.
— Erik J. Martin
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