5 Reasons Why Your Home Insurance May Be Going Up

5 Reasons Why Your Home Insurance May Be Going Up

Source: www.insurancehotline.com

You haven’t filed any claims, so why is your home insurance going up? It’s a common question that boils down to insurance trends. Insurance rates are based off more than just your personal claims history. They also take into account your company’s claims experience and the types of claims they commonly deal with.

Here are five reasons why your home insurance may be going up—and one easy way you can save on your home insurance.

1.    Worsening Weather Conditions

Flooding. Winter storms. Freezing rain. Downed trees. Canadian weather has no doubt become more severe over the past few years.  This means insurance companies are paying out more than ever for weather-related claims, an expense that is passed on to all insurance policyholders.

To put it in perspective, the 2013 ice storm in Toronto caused more than $200 million in insured losses, while flooding in Alberta cost $1.7 billion. In total, weather was responsible for $3.4 billion worth of insurance payouts in 2013.  In fact, Intact reports that between 2006 and 2012, “the amount of insurance damage resulting from extreme weather in Canada increased by over 650 per cent.”

Insurers have responded not only by redistributing some of these costs among all policyholders, but also by looking into or changing the coverage offered for weather-related claims. Homeowners are advised to carefully review their policies to learn what is and isn’t covered in regards to weather.

2.  Bigger, Better Homes

Homes are getting bigger. According to the Canadian Mortgage and Housing Corporation, homes have almost tripled in size from an average of 800 square feet in 1950, to 2,300 square feet in 2005. These days, homes average around 1,900 square feet.

Your home insurance is not based on your house’s market value. It is based on the cost of rebuilding and replacing your house. Basically, the bigger the home, the higher the replacement value which in turn translates to higher insurance premiums as well.

In addition, many people are now installing more high-end fittings. The current trend in granite countertops, for example, costs much more to replace than the old types of countertops.

3.    More Contents

The same goes for contents. Bigger homes often require more furnishings. Add to this the popularity of big ticket items such as media equipment, wine cellars, and finished basements, then your contents are going to cost more to replace, so your insurance is going to cost more as well. It is not uncommon for people to have more than one television and more than one computer, laptop or tablet, and top of the line appliances and household furnishings that all add up.

4.    Finished Basements

Finished basements are actually a relatively new phenomenon. It used to be that basements were a place for laundry or pantry storage, but now basements operate as extensions of our living spaces. People are putting more money than ever into their basements. HGTV quotes the average basement remodel at $61,303. This adds value to a home. It also makes basements and the contents more expensive to replace/repair in the event of a claim.

Basements are actually a large contributor to home insurance claims, as water damage can ruin media and entertainment rooms, expensive flooring, and even living spaces. Homeowners are advised to take action against basement flooding by installing sump pumps and taking other precautions to minimize risk, such as not storing expensive technology close to the floor. If you plan to finish your basement, make sure you address all problems with moisture first.

5.    Old Infrastructure

Aging infrastructure is an increasing problem contributing to sewage back-ups and basement flooding. Robert Tremblay, research director at the Insurance Bureau of Canada, told the Globe & Mail that claims for sewage back-ups have doubled in the past 11 years, something insurance companies are now factoring into their risk assessments. The Canadian government has committed to putting $53 billion into infrastructure over the next 10 years, but in the meantime sewage back-up is still a risk for homeowners across the country.

Homeowners should note that sewage back-up protection isn’t automatically included in a home or tenants insurance policy. It is actually an add-on offered by many insurance companies for an extra cost.



Home Insurance costs a small used car every year

Home Insurance costs a small used car every year

Foolish us: We bought a house. We should have been thinking about insurance, because, a few weeks in, I never want to have to think about insurance again.

Short version: We went to our insurance agents to insure the new place, and they offered to take it on for close to triple what we pay now, the equivalent of the price of a small used car every year.

Now, insurance costs are going up generally; anyone who pays the bills has been noticing that, even if you’re lucky enough to have no claims, the tab keeps rising and rising.

The industry says the increased costs are the result of extreme weather connected to global warming. Storms are going to be a lot more violent; there’s going to be more wind, stronger wind and heavier rain; the rain will also fall in shorter periods (translation: Flooding).

And that means more costs for insurance, you see.

Well, we own nothing on a flood plain.

That being said, all the rain in the world should make not one whit of a difference to my insurance. Here’s a snippet from a major Canadian firm’s website: “The most common exclusion under a home policy that would be considered an ‘Act of God’ is a flood. No insurance company in Canada offers flood insurance under a home policy.”

Perhaps, we thought, another agent will solve the problem.

Like the ones who were already insuring the house we bought.

Hallelujah! A price similar to the old house, only 10 per cent higher.

Finally — insurance for the house.

Ah, but then throw in the complication of a summer cabin. (In Nova Scotia, a cottage. In New Brunswick, it would be a camp.) Properties that are well outside St. John’s can be found for reasonable — sometimes extremely reasonable — prices.

Insuring, them, though …

Having escaped the price-of-a-small-car home quote, imagine my surprise at finding that insurance company No. 2 would be delighted to insure the summer place as well, but only after setting a replacement value for the place. They determine the value based on square footage and age — and, what do you know, they value the spot at more than three times what it actually cost to buy. Meaning its insurance will be three times what it is now. (Echoes of the first insurance company ring in my ears.)

No problem, says I, let’s just insure it for the purchase price.

Insurance company No. 2: No. We don’t do that.

I resist the urge to say: “I accept your offer. Pay me more than three times what I paid for the place, and it’s yours. I’ll throw in the mower free.”

I do point out that I could buy four vacation properties for what they have valued the existing one at.

Back to insurance company No. 1: Will you keep the insurance on the cabin? No, we won’t insure your vacation property if you don’t pay a small car for the main house, too. Any way you slice it, and everywhere you go, we want the price of a car.

I’m still looking.

Disclaimer: No adjusters were injured in the writing of this column. No matter how much I wanted to injure a few.

Tips to Protect your home this Halloween from Thieves

Halloween and Bonfire Night create lucrative opportunities for thieves, so knowing your insurance rights and taking precautions to protect your home are vital.

The end of October and start of November are particularly fruitful weeks for burglars as they look to take advantage of big events to catch out unsuspecting households across the country.

Tips to keep thieves away

With this in mind, here are some handy tips to help keep your home safe at this time of year.

  • Install outdoor lighting as this gives potential burglars less places to hide.
  • Lock your windows and doors even if you’re in.
  • Don’t leave keys hidden outside, near the door or anywhere easily accessible from the door.
  • Get an alarm system fitted as it’s likely to deter thieves.

It’s also worth being wary of distraction burglars. These criminals use a seemingly honest cause to gain entry to a homes before stealing items while the occupant is distracted.

Bogus callers could invalidate your home insurance and some home insurance providers won’t pay out for theft unless there is proof of forced entry, meaning opening the door to these criminals could leave you unprotected.

To be safe, double-check what cover your policy provides and be extra cautious about letting strangers into your home.

For more pointers on keeping your home and possessions safe read our guide to making your home burglar proof.

Vandalism woes

It’s also key to keep an eye out for vandalism during the spooky season as insurers report more claims for damage to cars and homes on Halloween.

Malicious damage and fires should be covered as standard on your building insurance, and on your car insurance providing you have a policy covering third party, fire and theft.

But it pays to take care to avoid the expense and stress of having to make a claim.

Popular claims around this period are for smashed windows and damage to doors and garden property.

Although many police forces will increase their patrols during this period, here are some things you can do yourself to reduce the risk to your property.

  • Park the car in a garage for the night.
  • Move garden ornaments and any other items out of sight, perhaps in a locked garage or shed.
  • Leave on lights, the radio or television when you’re out to make it appear as if someone is in.
  • Ensure sheds, garages and other out-buildings have robust locks.
  • Don’t answer the door to trick-or-treaters if you don’t feel comfortable doing so and place a note or poster, such as this one from Gloucestershire police, on your door if you do not wish to have any visitors on Halloween.

Stay protected from thieves

Gareth Lane is head of home insurance at Confused.com.

He says: “Due to the seasonal spike in crime it’s especially important to take steps to ensure you and your home are properly protected.

“Alongside measures to keep thieves away and deter vandals, having home contents insurance is of primary importance.

“Otherwise you may be forced to cover the cost of any loss or damage as a result of a burglary, for example, out of your own pocket.”

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5 Risky Home Insurance Customers: Are You One?

By Samantha Alexander 

Do your hands tremble every month when you pay your home insurance premium? Do you spend the next 20 minutes complaining to your significant other about the cost? Or, worse, have you ever been denied homeowners coverage all together? If so, you might be a risky insurance customer and not even know it.

Insuring a house has as much to do with you as it does the actual building. Home insurance providers set your premium by evaluating the risks posed by you and your house. Homes in Tornado Alley, for example, cost more to insure because of the risk of wind damage. As for you, if you pose certain risks as a policyholder, your premium could shoot through the roof.

Here are a few types of customers who may raise red flags for home insurance providers. If you are one of them, your provider might be saying, “It’s not your house — it’s you.”

The low credit scorer

Credit report with scoreIf you’ve got a low credit score, your home insurance provider could consider you a risky insurance customer. Insurance providers often factor in a homeowner’s credit score when determining premiums, and usually a lower score means a higher premium.

Why? Because carriers believe  a poor credit score signifies high risk. The good news is that if you’ve got a low credit score now, you can work to improve it over time. How? Pay your bills promptly, actively monitor your credit score and don’t take out too many types of credit.

The dog lover

When it comes to risk, you may not think your cuddly pooch poses a threat, but some insurance providers believe differently. Carriers often won’t provide coverage for certain breeds because, statistically, they pose more of a liability risk. Pit bulls, Dobermans, Rottweilers and Akitas are just a few breeds that could cause your insurer to elevate your risk as a policyholder.

As for dogs outside those breeds? It depends. If your canine has a history of biting, you could face higher premiums or be denied liability coverage for the animal. Sure, every dog is different, but insurers don’t mess around when it comes to dog bites. The average payout for a dog bite claim in 2013 was nearly $28,000, according to the Insurance Information Institute (III).

The pool owner

Your pool may have seemed like a big plus when you purchased your home, but chances are your insurer isn’t as enthralled with it. Swimming pools pose a big liability risk to insurers. According to the Consumer Product Safety Commission, an average of 5,100 pool- or spa-related injuries in children younger than 15 were treated in hospital emergency departments for 2010 through 2012. During the same time period, 390 pool- or spa-related deaths were reported.

The bottom line: Pools are dangerous, and insurance providers know they increase the odds of a lawsuit.

The procrastinator

Are you bad about getting around to repairs in your home? The longer you put off getting that new roof or fixing that leaky pipe, you could be costing yourself some serious dough. Procrastinating on home repairs not only makes you vulnerable to claims, but the more you wait, the longer you could be stuck paying a high premium.

For example, change out the supply hoses on your water heater and washing machine; you can upgrade to braided steel hoses for about $100. An appliance failure could cost you (and your insurance provider) thousands of dollars.

The unlucky homeowner

You may be the most responsible homeowner who ever lived and simply be unlucky when it comes to claims. You can’t help it if a storm caused a tree to crash through your window or if hail pummeled your roof. However, having claims on your history may cause you to look riskier to an insurance provider.

To avoid more claims, do some things to boost safety on your property such as cutting dead branches off trees or checking your roof for loose/missing shingles. Prevention can go a long way in avoiding future claims.

Paying high home insurance premiums or getting denied coverage can be a frustrating experience. However, there are other ways to reduce your premium or find coverage. Comparison shopping is a surefire way to either find the lowest premium or find a provider who will offer you coverage. Each carrier has a different algorithm for determining risk — just because it doesn’t work out with one doesn’t mean you can’t find coverage elsewhere.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.


The Basics of Buying Homeowner Insurance

This is best done as soon as possible so your home is secure. If you do not acquire the right insurance, you could receive a rude awakening if your home were to be destroyed by fire or another natural disaster. Here’s how you acquire insurance:

1. Assess Your Home

The first step in the insurance-buying process is to provide details of your home to your Insurance broker.  Important information to record includes:

  • The year your house was built, square footage and construction material (such as type of shingles, siding etc)
  • Fire Protection i.e how far from a fire hall, are you hydrant protected or unprotected

You must present this information to your insurance broker so you can calculate the right rebuilding value.

2. Meet with a Broker

The insurance professional will help you calculate the rebuilding value of your home. Be aware that the replacement cost of your home may be different than what you paid for the home, due to the possibility of increased labor costs, debris removal, building codes, etc. This is separate from the resale value, which is the amount that would be paid if the house was sold.

Based on the characteristics of your home, the broker will help you choose the best homeowner insurance policy for your needs. You can also enhance your insurance in the following ways:

  • Sewer Back-Up: provides protection for losses that come from problems with a sewer, drain, eaves trough, septic tank, sump, or downspout.
  • Increased Liability: protects you from property damage or injury you may accidentally cause to someone else.
  • Floaters: Your homeowner insurance should cover the basic cost of your valuables if they were to be lost in a fire or theft. If you have valuable items that are worth more, you can enhance your insurance coverage to protect them.
  • Identity Theft: helps cover you in the event of someone committing fraud using your credit card, social insurance number, or driver’s license.

3. Inventory Your Belongings

In order to ensure your limits are adequate, make sure you have taken stock of all your belongings so you can get full coverage. Go room to room, recording everything you own. If you find that your belongings are worth significantly more than what your insurance policy would cover, talk to your broker about increasing limits.

Souce: Drayden Insurance LTD

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