Posted in: Homeowner tips

Take control of rising insurance costs

A new home

Key Insights

  • Home insurance rates have seen historic rises over the past few years due to increased claims, severe weather and rising repair costs.
  • There are many factors that carriers take into consideration when determining your coverage and rates.
  • While insurance costs aren’t what they used to be, there are ways you can help lower your premiums.
  • Partnering with an independent insurance agency like Edina Realty Insurance* can help you find the coverage you need for the lowest price and best coverage possible.

Scott Teece, Vice President of Sales, Edina Realty Insurance

It’s not just you, and it’s not in your head; insurance pricing and premiums have been rising rapidly over the past few years—some in the double digits. These historic rate increases mean some homeowners aren’t able to afford the same coverage as before. Or, even if they can afford the increases, in many cases the coverage has lessened. There are a few reasons for these increases—and some steps you can take to manage your insurance costs.

Why insurance is changing

2022 and 2023 held the most insurance claims seen in years. While this is true across the insurance industry, for home insurance, an increased frequency and severity of storms, natural disasters and wildfires have put a significant strain on insurance carriers who weren’t anticipating fulfilling the exorbitant amount of claims filed. Outside of the rise in claims, inflation has also caused repair costs to increase (both in labor and materials), making it more expensive to return properties to their previous state.

As a result, insurance companies are raising rates and lowering coverage for two primary reasons:

  1. To recoup their losses from claims filed over the last few years.
  2. To return to a position of profitability (rate adequacy).

Some insurance companies have even begun using technology like drones to survey homes and determine if they are in good enough condition to insure. It’s not uncommon for inspections to occur before coverage is offered, and a refusal to renew coverage has become more mainstream.

What impacts your coverage

There are a lot of factors that a carrier may consider when determining your premium and contract, but they primarily fall into three categories: home, owner and coverage.

Home factors: What is being insured

  • Location: Coverage can vary wildly by location, even as targeted as a neighborhood. If the location of your home has a history of losses, is close to water, has severe weather, vandalism or theft, it can increase costs. On the flip side, factors like living near a fire station could lower costs.
  • Age of home—especially the roof: The condition of the roof is a huge concern to insurers. It’s the #1 indicator of future claims.
  • Size of home: The more there is, the more that can need repair.
  • Safety features: This includes home security, as well as yards clear of debris, well-lit paths and steps with railings.
  • Condition of home/Construction of home: The better condition the home is in, and the higher the quality of construction, the less likely a claim will be filed. Your home doesn’t have to be new, but the upkeep of the home should be evident.
  • Attractive nuisances: These are potentially dangerous features that might look attractive. For example, a pool, trampoline or tree house. Most HOAs have regulations that negate any worries a carrier may have (like a net around the trampoline or fence around the pool), but they could still be a factor in your coverage.

Owner factors: Who is being insured

  • Credit history: Some states will use your credit score as an indicator of your reliability to pay, however, other states prohibit carriers from using this information. (In MN and WI, carriers can use credit history.)
  • Previous claims history: Insurance companies tend to believe that if you’ve filed a claim in the past, you’re more likely to file one in the future.
  • Marital status: Statistics tend to show that married couples file claims less often than singles. It also helps if there are two incomes and/or two sets of eyes to manage home upkeep.
  • If you own or finance: Most lenders require you to have a certain amount of coverage, but if you own your home, you have control over how much coverage you want to have.
  • Pets in the home (especially certain dog breeds and exotic animals): The risk for injury that could result from a pet (like a dog bite) can be a factor for some carriers.

Coverage factors: How it’s being insured

  • Your deductible: A high deductible usually means a lower premium. The reverse is also true. (Though higher rates for both have been common recently.)
  • Type of insurance policy: The more coverage your policy provides, the more money you can expect to pay out to your insurance company.

What homeowners can do

The situation might seem discouraging, but there are ways you as a homeowner can help keep costs lower.

Be proactive

Check on your renewal date and start comparing options about 45 days before your renewal. You’ll need to make your decision two to three weeks before your renewal date to ensure consistent coverage. Switching carriers isn’t a difficult or lengthy process, but you want to make sure you don’t have any gaps in your coverage.

Be diligent about reviewing your contract and pay special attention to any language that’s changed. Call your agent for clarification about any changes you don’t understand. Ask if increasing your deductible would help with costs and if that’d be the right move for your home.

Shop around

There is no reason you shouldn’t be shopping around for insurance. Even those who have been with a company for a long time may benefit from switching by getting new customer discounts. Rates from two or three years ago are unheard of now, but that doesn’t mean you won’t be able to find a better rate or more coverage with another carrier.

Ask about the different discounts you could get, like bundling home and auto, veteran’s discounts, new member discounts, senior discounts, etc. Every little bit helps.

Again, there’s no reason not to shop around, so look around and see who’s competitive.

Be upfront

The more information you can give upfront to an insurance company, the better. They’ll ask for your personal identifying information (birthday, history at location, etc.), the square footage of your home, the age of your roof, if you have a finished basement, pets, fences, railings, a pool, etc.

Be prepared that your home will be inspected and make sure your yard is clean and free of debris. You may even decide that it’s time to get rid of some of your attractive nuisances. Ask for the inspection results and any recommendations the company may have so you can make improvements and get a feel of how insurable your home is.

Start saving

The reality of the situation is that coverage and cost just aren’t what they used to be. You’d be wise to start saving for big item repairs like a roof to avoid additional cost increases. It will help you with general upkeep to file fewer claims and help meet those high deductibles when you can’t.

Partner with a broker who looks out for you

Insurance companies are about their bottom line, but insurance brokers like Edina Realty Insurance are about getting you the coverage you need at an affordable rate. As an independent broker, we work with A-ranked insurance providers that you can trust and advocate for your interests.

Edina Realty Insurance consults with each consumer to make sure they know what they're buying and what they need, and our partnership doesn’t end once you’ve chosen a carrier. We’re here to help you figure out everything about insurance like what makes the most financial sense when debating to pay out of pocket or file a claim for a repair.

A great bonus of working with Edina Realty Insurance is that if you’ve bought a home through one of our talented agents, we already have much of your information on file so you don’t have to dig up facts like square footage or age of the roof.

There’s no reason not to reach out for a quote. A quick conversation with an Edina Realty Insurance agent can help take the work out of getting quotes and finding the right coverage at the right price. Reach out today for a quick conversation about your insurance needs.

*Edina Realty Insurance is an affiliate of Edina Realty. See Affiliated Business Arrangement Disclosure Statement

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