Insurers increase homeowner premiums
In the last year, Oklahoma’s home insurance providers have increased premiums by as much as 15 to 35 percent according to the Oklahoma Insurance Commission. Instead of a gradual increase in rates spread over several years, companies are bumping up the costs all at once. In the past, insurers held off on rate increases despite rising claims costs because they were able to offset underwriting losses with big profits from investments. Since the stock market has gone into a free fall the loss of investment income has forced insurers to cover the costs of claims payouts by raising premiums.
Insurance providers cite several causes for the significant rise in claims costs. In the ‘90s the number and severity of natural disasters increased dramatically resulting in a huge increase in the number of claims filed. A spokesman for the Insurance Information Institute also points out that home repair costs are rising 7 percent a year and the proportion of aging homes to new homes is growing rapidly. Now, insurers are getting hit with big increases in the number of claims being filed for damage caused by household mold. Jury awards for cases involving toxic mold are reaching into the millions of dollars.
Aside from higher insurance rates for current homeowners, a growing number of new homeowners are experiencing difficulty even finding insurance coverage. Several insurers have stopped writing new policies in some states.
Alice suggests a few tactics for reducing the cost of your insurance premiums without limiting coverage.
- Raise your deductible. By hiking your deductible from $500 to $1,000 you may slash 15 percent from your annual premium. A $5,000 deductible reduces the annual premium by 25 percent.
- Bundle insurance policies. Many insurers will offer a reduced rate if a customer buys more than one policy through the company. For example, a discount of 5 to 15 percent is often given to a customer who buys homeowners and automobile coverage from the same insurer.
- Ask about the loyalty discount. Some insurance companies will offer a 5 percent discount to customers who have been with them for three to five years. Those who stay with the company for six years or more may see savings of a much as 10 percent.
- Install theft prevention systems and safety devices. Most insurers reward customers with lower premiums if they use safety devices such as smoke detectors and install alarm systems or anti-theft devices. Simply adding deadbolt locks may reduce your premium by 5 percent. Installing an alarm system that connects to the fire and police departments may save you as much as 25 percent with some insurance companies.
- Quit smoking. Insurance companies often give as much as a 5 percent break on premiums to smoke-free households.
- Don’t insure the land. Make sure that your premium is based solely on the value of your house, not the house and the land it sits on. The land isn’t going to suffer damage or loss— a thief isn’t going to cart it off nor is a tornado going to blow it away.
Source: © Alice Dahlgren's AtHome Newsletter
