If you have homeowners insurance, you may have noticed that your rates seem to go up more often than they go down. That's why it's important to understand why insurance premiums change each year.
Carrier Losses
One factor that you do not have any control of is the carrier's losses. This means that if homeowners have made too many claims and the insurance company is paying out too much money, they are going to end up charging more for their services in general.
However, they also look at claims that are made in a specific area. If you live in a very population dense area or an area with older homes, you may end up seeing rates increase simply because your part of the city is more likely to make a claim. This makes the area more risky, and rates increase as a result
Inflation
Insurance also looks at what the cost will be to rebuild your home in a total loss situation. As you can imagine, the cost to build a home today is going to be a lot cheaper than the cost to build a home 30 years from now simply due to inflation. That is why there is a small increase in your home insurance premium based on the percentage of inflation, so that the policy keeps up with the rising cost of construction materials.
Liability
Insurance companies also look at your personal liability, which can increase or decrease over the years. For example, if you add a swimming pool to your yard, that increases your liability because someone is more likely to be injured. On the flip side, getting rid of that swimming pool can cause your liability to decrease, which reduces your premiums.
Claim History
Your home insurance provider also looks at your claim history to determine how big of a risk you are as an individual. If you find that you are making frequent claims over the year, the provider is going to view your home as being more risky to insure. It can result in seeing your premiums increase after making claims. Even if the claim is not your fault, such as a natural disaster, it can still impact your premiums.
Pets
Having pets can also change the risk factors of your home. Having a dog that is known as being a more aggressive breed can increase your risk of them biting another person. If your pet ends up passing away, let your insurance company know since that can actually cause rates to decrease. Look into an agency like Oliveira Insurance Agency for more details.
Share18 April 2022
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