Today’s Insurance Journal has an article about a report from an online home insurance provider, homeinsurance.com, indicating national homeowners insurance premiums went up an average of 19% in 2011. According to the report, the typical premium for a new home insurance policy in December 2011 was $810 nationwide, up from $682 in January 2011. The quarterly RateReport data from homeinsurance.com represents approximately 15,000 policies sold across the United States with various carriers including Travelers, Safeco, Foremost, Liberty Mutual, The Hartford, and ASI/Ark Royal. This blog post will tell you what you can do to reduce your price after a large home insurance rate increase.

Some of the states with the largest price increases are Mississippi, Montana and New Mexico, where new policies sold at the end of 2011 were seeing 29-39 percent higher premiums than policies sold in the beginning of the year. Some states saw lower rates, like Vermont, Virginia, West Virginia and California, of about 1 to 3 percent. Washington DC home insurance rates are about 7% lower than the start of 2011.

Homeinsurance.com works with companies selling through independent insurance agents. The insurance companies with the largest market share of the US Homeowners insurance market, like State Farm, Allstate, Farmers, & American Family, sell policies through their exclusive agents, so if you are insured with any of these companies, the Insurance Journal article about the national 19% homeowners rate increase in 2011 is not representative of your rates. But one thing of which you can be sure, regardless of which insurance company is insuring your home, rates will go up for some companies, and down for others almost every year.

Large catastrophes, like wildfires, hurricanes, and tornadoes, cost insurance companies millions of dollars each year, and many companies pass the cost on to you through large rate increases.

Also, be aware how average rate increases or decreases can be misleading to the individual customer.

In my experience, an insurance company will have, for example, an overall 8% home insurance rate increase in the state. Some customers may see their rate increase only a few percent, and others may see a 20-25% rate increase for their home insurance policy, although the company will tell you it was an average 8% rate increase. Some customers may even see their rates go down, while the burden of the overall rate increase is put upon “higher risk” customers.

Frequently, insurance companies will adjust their rates, where there is NO rate increase on average, but some customers are getting new lower rates, and other customers are paying much more.

How would you like to be told your insurance company did not increase their rates, but your rate went up significantly, and not because your risk profile changed, by having a claim? Nothing about you or your home is changed, but now the company has decided to charge you more money, while insisting there was no rate increase.

You can’t stop or appeal a rate increase, but there are two things you can do to reduce the price of your insurance:

1. You can review your coverage to see if you can remove or reduce insurance coverage you don’t need.

2. You can shop with all the leading insurance companies to make sure you are getting the best coverage you need at the best price.

Why not do both these things? It’s the smart thing to do if you want the right coverage at the best price.

It’s important to review your insurance coverage each year. With homeowners insurance claims, homes tend to be under-insured. The cost to rebuild is often under-estimated. Or maybe, you had an addition to your home, like a deck or a new room, finished a basement, or remodeled a kitchen or bathroom, and these things were not taken into account when determining how much insurance you need.

Occasionally, homes can be over-insured, too. Maybe your mortgage company required home insurance equal to your home loan, but the cost to rebuild your home is less than the loan amount. If you live in a popular location, it’s not unusual for your home’s market value it be lot more than the cost to rebuild it. Particularly if you bought your home during the housing bubble, you want to make sure you are insured to the current cost to rebuild, and not some sky high market value from earlier in the last decade.

Even if you insured your home properly, based on your insurance company’s estimate to rebuild it, the amount of insurance might be more than you need now. Most home insurance policies increase the amount of your coverage each year to keep pace with the inflation rate for labor costs & building materials. But your coverage is never reduced if labor costs & building material costs go down. Over many years, your home may become over insured.

Review your coverage each year. Your life is always changing. Maybe you bought more furnishings requiring more coverage, or high value items like jewelry or computer equipment, which have limited coverage you may need to increase. Maybe you are still paying for coverage you don’t need, like extra coverage for jewelry or another item you sold long ago.

Reviewing your coverage with your agent each year can save you money, get additional discounts, and help you have the coverage you need when you have a claim.

However, if your agent knows you want a lower price because your rates went up, your agent may show you ways to lower your price by removing coverage you actually need.

Most agents and insurance companies want you to have the proper coverage, but it’s more important to them to keep you as a customer.

I, myself, in working with customers having large rate increases, would honor customer requests to remove as much coverage as possible, to get the lowest rate. I always advise how the reduction of coverage can cost the customer more money in the long run, or possibly bankrupt them, if they have a claim, but the choice of coverage is always up to the consumer.

I know there are a lot of agents less diligent than other agents about explaining the possible consequences of reduced coverage, being more focused on doing what is needed to get you the price you want, to keep you as a customer.

The smart thing for the customer to do, rather than removing important coverage to keep the same price before the rate increase, is to shop with all the leading insurance companies to find a better price for the same or better coverage.

It is not unusual to get MORE coverage at a better price and better service. Unlike other products, you don’t get better service or coverage by paying more with a high-priced insurance company. Some of the insurance companies with reputations for good service have low rates and better coverage options.

It really does pay to shop for better rates and get additional opinions on the proper coverage for you.

Use the information about leading insurance companies on my website by clicking the link below. By being a wise shopper, reviewing your coverage with other companies and checking their rates, you can make sure you are always getting the best coverage & price for you.

www.smartshopyourcarinsurance.com

Shopping your auto & home insurance together is a great way to save money on both car & property (home/renters/condo/mobile home) insurance. Click the ads in this blog post, get auto & home insurance quotes now, and don’t delay saving money.

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