Let’s figure that out together, shall we?
So why are insurance premiums going through the roof? Here are a few factors for you to consider.
1. Modern Homes Are More Expensive
Technological advancements have really turned homes into luxurious paradises kings of old would be envious of, but that ultra-modern cooling system or heated pool could be the reason your insurance costs have increased. Because the liability and replacement costs of your creature comforts are higher, they tend to push your premiums up as well.
2. Going Green Has its Risks
Modern housing designs are focusing on using eco-friendly materials. That’s all good for Mother Nature, but your insurance company will charge you more for going green.
Not fair you say?
The reason behind that is that eco-friendly appliances and home features are expensive to repair or replace when they get damaged. Besides, they are more prone to damage than their conventional counterparts. This forces insurance companies to increase their rates on such homes so as to enable them to be able to cover your property.
3. Severe Weather
Another reason behind the increasing insurance rates is the fact that weather patterns have become more extreme. A casual look at the news and you’re likely to hear of tornadoes, wildfires, hurricanes, and a whole lot more. This has resulted in many homes and properties being destroyed by natural disasters. As a result, more claims are being made and insurance companies have been forced to up their premiums in order for them to better serve their clients.
4. Recent Renovations
For many homeowners, upgrading their homes is a project they dream of. However, when you embark on improving your home, you will have to factor in the fact that the value of your home will increase, resulting in your insurance premium having to be adjusted upwards.
5. Neighborhood Changes
In the modern days we are living in, big data and analytics dictate the way your insurance premiums are calculated. Your insurance company will use data analytics to determine the risk factor associated with your neighborhood.
For instance, if a night club opens in your neighborhood, it increases the risk of crime, therefore driving insurance premiums in your neighborhood up.
Top 5 Ways You Can Save on Your Insurance Premium
While it may seem like it’s all doom and gloom as far as insurance rates are going, there are some ways you can make some savings. Let’s look at the top 5, shall we?
1. Put Your Eggs in One Basket
Although conventional wisdom says not to put all your eggs in one basket, with insurance, it could actually be better for you. This simply means getting your home, car, and whatever other insurance you need from the same company.
Doing so will get you better rates and give you leverage for negotiation.
2. Reduce Your Risk Factor
The main cause of insurance rates going up is the fact that risk has increased. If you can reverse that, you can actually get better rates on your premium.
How do you do that?
You can reduce the risk of theft by installing a good home security system. You can also reduce the risk of damage by fire or water by installing devices that help you avoid such damage. For example, a backwater valve can reduce the chances of you making a water damage claim while a smoke detector reduces the risk of fire damage.
Installing devices that reduce the risk of damage to your house and property will definitely help you save on home insurance premiums.
3. Part with a Higher Deductible
While this may seem counter-intuitive, paying a higher deductible will actually help you save more in the long run. By paying a higher deductible, you will end up paying lower premiums. The opposite is also true in that the lower your deductible, the higher your premium will be.
In order to make this strategy work for you, you will have to talk to your insurance agent and find out the most comfortable balance you can strike between deductible and premiums.
4. Pay Off Your Mortgage
Paying off your mortgage not only gives you more financial breathing space, but it can also help you make a saving on your home insurance premiums. This is because a fully paid for house is liable for a discount on home owner’s insurance.
5. Keep Your Claims to a Minimum
While most of your property is precious to you, you sometimes have to minimize on filing claims. Consider whether it’s better (in the long run) to file claims on low-value assets or to replace them yourself. Hint: replacing low-value items yourself is always better.
Insurance Companies Still Have Your Back
After looking at the reasons behind the increasing home insurance premiums, I’m sure you’ll agree with me that your insurance company still has your back. While the extra dollars leaving your pocket may not be easy to part with, you’ll definitely be glad you did when disaster strikes.