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Why Did My Homeowner's Insurance Go Up?

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Services for Real Estate Pros Insurance NPN # 13379201

This is very good post about insurance premiums & insurance rates. We have seen insurance premiums increasing exponentially over the last several years in all of the gulf states & the eastern seaboard. 

Coverage limits,deductibles, and what is included or excluded from your coverage are key premium factors

Original content by Tom Branch TX Broker 0513551

Texas HomeHomeowner's insurance provides coverage for your house and contents. In states like Texas, homeowner's coverage starts high and goes higher. Texas had the highest homeowner's insurance in the nation in 2011. States regulate homeowner's insurance, approving the policy language and rates. One solution to rate increases is to shop around for your homeowner's insurance. High price does not necessarily give you better insurance.

Homeowner's insurance comes in three basic types. HO-1 is too basic, and some states and companies no longer use the form. It covers 11 items or perils and no others. HO-2 includes the 11 basic perils and 6 more for a total of 17 perils. HO-3 provides better coverage for the home and contents ans is more expensive than the H0-2. HO-3 covers 17 perils and any others it does not specically exclude. Exclusions might include flood, earthquake, war and nuclear accident.

Your homeowner's policy costs will go up based on certain factors. Premium calculations are based on location, sometimes down to the county or city, and the distance from a fire hydrant. So if those risk factors changed in the past year, you could see a premium hike. The Federal Trade Commission reports that auto and homeowner's insurers use credit scores for determining insurance costs too, because better credit scores represent more stability and less risk. If your credit scores have decreased, your homeowner's insurance premium may increase.

Most polices increase the policy limits based on inflation rates. Your premium cost goes up each year, but so do your coverage limits. If you have a replacement cost insurance policy instead of actual cash value, premiums will increase with the cost of construction materials. Actual cash value considers depreciation and age of the home and contents; replacement cost considers only the cost of replacing the item in today's market.

C.L.U.E. -The Comprehensive Loss Underwriting Exchange database retains records of information about any claims you make . Homeowner's insurers use C.L.U.E. reports for your history to evaluate your likeihood of making a claim. If you have made a claim in the last seven years, C.L.U.E. has it in the database and the insurer rates your policy premium based on the report. A recent claim will cause your homeowner's insurance to increase.

Photo: Licensed from iStockPhoto | Source: John Wendell, Risk Guru

Originally posted at http://www.thebranchteam.com/wordpress/2013/01/10/why-did-my-homeowners-insurance-go-up/

 

Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton.  While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure.  Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.

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Comments (12)

Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

With any business, insurance being a good example. Losses need to be made up, some years more than others. This is one of those years.

Jan 09, 2013 08:39 PM
Frank Laisch
Orlando, FL
"The Insurance Guy"
Your exactly right Joe, we are all here for profit
Jan 09, 2013 08:43 PM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Policy holders rarely think that they are in a POOL of insureds and that the ENTIRE POOL pays when claims are made....individual claims are not the only factor when rates are increased!

Jan 09, 2013 09:01 PM
Al Raymondi
Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL
Ormond By The Sea Florida - Home and Condo Sales

Good explanation of the insurance premiums Frank, many folks just don't understand what goes into developing those rates.

Jan 09, 2013 11:06 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Frank I have been very lucky with my premiums.  They have increased very little over the years, and my Agent keeps an eye out for me, and if she can get me a cheaper rated she give me a call.  But I can see with all the damage from storms over the last few years that premiums would be going up in those areas.

Jan 10, 2013 04:07 AM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Great point Wallace

Al, so many don't, we try to educate as much as possible

George, You are a lucky man!

Jan 10, 2013 09:47 AM
Sabrina Schirmer
National Insurance Solutions, LLC - Winter Haven, FL

Like everything else, costs are going up. these disasters are more damaging and it effects everyone

Jan 12, 2013 09:47 PM
David Cole
David Cole CPA - Orlando, FL
David Cole CPA

Frank, thanks for sharing, too many people do not know their policy coverage's, they just know they have insurance

Jan 13, 2013 01:14 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Great choice for a reblog. Hope you are enjoying this fantastic weather we are having.

Jan 14, 2013 03:55 AM
Frank Laisch
Orlando, FL
"The Insurance Guy"

Thanks Barbara-Jo, David & Sabrina. Homeowners need to shop or better yet to call us to get some great rates on insurance

Jan 18, 2013 08:55 PM
Amy Stockman
Lakeridge Land Suveying & Mapping, LLC - Winter Garden, FL
Lakeridge Surveying

Frank, thanks for sharing this. I know is always hard to understand insurance, whats covered and whats not

Jan 25, 2013 11:06 PM
Insurance Solutions
Insurance Solutions Unlimited, LLC - West Palm Beach, FL
Insurance

Very good post on Insurance. Visit www.nat-ins.com for some great insurance rates

Feb 03, 2013 07:38 PM