“How could insurance rates go up and the value of my house is and has declined?” is the question many puzzled home owners are asking. Insurers say rates are not totally based on the value of a home; other factors come into play such as the cost of rebuilding a home. Key building materials: plywood prices are up about 8%, copper is up about 20%, and gasoline as we all know the cost has risen significantly.
The recent rising number of weather related disasters such as: tornadoes, flooding, hurricanes, snow storms and other extreme weather conditions will drive rates higher. Even the recent earthquake and tsunami in Japan will affect the rates here in the U.S.
Home owners can shop around for the best prices, but make sure you are getting all the coverage you will need, and an insurance company that can weather a financial storm.
Ref: Smart Money May 17, 2011