I recently saw this question posed by a person who had made no claims against her homeowner’s policy and had made no changes in her coverage. Yet, her annual premium was increased by 25%.
Almost doubled
This same woman said that she had changed companies a few years back because they offered her a good rate. However, when it came time to renew her policy, the company nearly doubled her cost. Again she had filed no claims and made no changes to your coverage.
Should she make another change?
The woman was unhappy that her annual premium had been increased by 25% and wondered if she should shop around again for another insurer. She was also concerned that the same thing would happen to her again – that at the end of the policy year she would see another big rate hike.
It’s not for life
If you get a great rate when you buy homeowner’s insurance from a new company, don’t think that this will last for life. There are almost always insurance companies interested in expanding their market share so they lower their prices to attract new customers. They then raise their premiums if their claims costs go up or if they just want to cut their risk. This actually happened to me this year. I hadn’t filed any claims or changed our coverage but our premium increase significantly due to wildfires that devastated several of our towns.
It’s that old adage
In our case it was that old adage, “there is no such thing as a free lunch” or even a cheap one. Our insurance company had suffered serious losses due to the wildfires and had to raise all of their policyholders’ premiums to recoup their losses.
It never hurts
It never hurts to shop around even if your premium hasn’t been increased dramatically. That’s the only way you can find out if you’re getting a really good deal. But before you change companies, be sure to check your state insurance department’s complaint survey. This will show you which insurance companies have the best and worst reputations.
The lowest cost might not be the best
Trying to buy the lowest-cost insurance could be just a short-term win. You might be better off choosing an insurer that charges a bit more but that is more stable, more consumer friendly and has better customer service.
How to reduce the cost of your homeowners insurance
If you’re interested in reducing the cost of your homeowner’s insurance without changing carriers, you might increase your deductible. If you were to raise it from, say, $250 to $1000, you could probably lower your premium by 25%. For that matter, you should pay for any small damages yourself because if you file a number of small claims, it’s likely that your premium will be increased.
