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My Homeowners Insurance Renewal: OUCH!

By JLP | August 2, 2007

I received the first draft of our homeowner’s insurance policy. Our premium went up to $1,823, a 19% increase over last year’s premium of $1,528. Oh, and they added a new 2% deductible for wind damage, which would put us on the hook for the first $4,652 in damages if our home received any wind damage.

My first, quick-tempered reaction was, “What the hell do I have insurance for?” I realize that’s an immature response but consider this:

I remember putting on an entire roof with architectural shingles just a few years ago for $200 less than that deductible! I’m sure that roofing materials have gone up in price since then but I’m not sure how much.

This is what stinks about insurance. We have been in our house 8 years, NEVER filed a claim, and yet our rates keep going up. Of course it doesn’t help that we live in an area that was hit particularly hard by the mold BS that happened several years ago. It also doesn’t help that we suffered a hurricane in 2005. Still, these rates seem a bit extreme especially when you consider the fact that our premium was around $850 per year not too many years ago.

My insurance agent is working on getting the limits of liability reduced, which should drop our premium and deductibles some (the deductible is a percentage of the limits of liability). I’ll let you know what the final premium is as soon as I find out.

UPDATE: I guess it could always be worse.

Topics: Disaster Planning, Homeowner's Insurance, Insurance | 19 Comments »


19 Responses to “My Homeowners Insurance Renewal: OUCH!”

  1. Chris Says:
    August 2nd, 2007 at 1:12 pm

    I am in the same boat you are! I recently blogged about my home owner’s insurance fiasco

    http://beyondtheconsumer.blogspot.com/2007/08/home-owners-insurance-nightmare.html

    We have a separate policy for regular insurance and for the wind damage. The wind damage insurance alone is $1,600 a year, with the regular insurance coming in at $500 a year. This is a $400 increase from last year.

    Worse, it seems that the fewer hurricanes we have, the higher the rates go! You’d think with no potential for damage, the rates would go down.

    Glad I’m not the only one pulling his hair out over it!

  2. Adam Says:
    August 2nd, 2007 at 1:34 pm

    Insurance in this company is a joke. Particularly with health insurance, but really any insurance, how are increases we’ve seen the in the recent past in any way sustainable? Are they trying to drive people to turn against the private sector?

  3. Brian Says:
    August 2nd, 2007 at 1:38 pm

    I was just reading an article in the WSJ about the percentage deductibles you mentioned. Do you have any percentage based deductibles in the rest of your policy?

    It seems outrageous that you would have a $4,652 deductible for ANY type of damage.

  4. Al Brockman Says:
    August 2nd, 2007 at 2:29 pm

    I went through this last year – Just remember – don’t get mad, get even.
    Look at your policy and see what has actually impacted the rates from last year to this year. In my case it was the replacement value. The insurance company thought it was appropriate to raise the replacement value by over 50%!!!!
    I spoke with a customer rep and her supervisor; then the manager. My simple request was – Please explain the mathematical or logical basis for this increase. I also had an estimated market value for my house; the current assessed value (from the Town Assessor’s office; and the land value (also from the Assessor’s office online database).
    Obviously, the replacement value for your house excludes the land (it doesn’t burn). Many Assessor’s databases also give you the depreciated value of the house. Calculate the undepreciated value. Then demand to know why the insurance company’s number is different

    Bottom line – the insurance company reduced my replacement value by over $100,000. Anybody who pays the premium without doing due diligence deserves what they get.

    As a side point, it is worth looking at your deductibles compared to the delta in premium. You might want to adjust the deductible and save some money. Also, make sure you have an umbrella policy

  5. Chris Says:
    August 2nd, 2007 at 2:37 pm

    Al Brockman, what a coincidence! I actually disputed the appraisal they had for my house and today got a reduction in the rate.

  6. ScottC Says:
    August 2nd, 2007 at 4:44 pm

    Don’t look now, but I think you misspelled “Homeowners”.

  7. thefeeonlyplanner Says:
    August 2nd, 2007 at 6:15 pm

    Wait a minute, I thought JLP’s father in law was looking out for him:-)

  8. JLP Says:
    August 2nd, 2007 at 9:34 pm

    thefeeonlyplanner,

    There’s not a lot you can do when it’s the insurance company making these changes. They are doing what they can.

  9. Doug Says:
    August 3rd, 2007 at 6:40 am

    ..well, all buyers want low prices — and all sellers want high prices.

    How much ‘should’ your property insurance cost ‘now’ ?

    You can’t objectively calculate that … you can only assess the market price.

    No commercial company owes you insurance coverage — it’s a 2 way street. If selling insurance coverage becomes unprofitable… nobody will sell insurance at all.

    Of course, insurance is one of the most heavily government-regulated businesses in America. The unpredictable heavy-hand of politicians thus adds a lot of risk to insurance sellers; it also tends to keep out new insurance companies who would compete with lower rates. There really is no fair ‘market’ price for insurance due to outrageous political interference in that business.

    Shop around to the extent you can… and get the highest deductibles you can afford. I would view homeowner’s insurance as ‘catastrophic’ coverage only — take care of the small stuff yourself.

  10. Frank Says:
    August 5th, 2007 at 1:50 pm

    insurance companies are not your friends see bloomberg article http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=aIOpZROwhvNI

  11. SavingWithMe.com Says:
    August 7th, 2007 at 2:51 pm

    Unbelievable. I work with quite a few guys that live on the coast and commute and an hour inland to our work. Their insurance rates are two to three times the cost of mine, living just an hour inland. The increases have become out of control and it does not seem like the government in my state, Florida, is able to do much about it.

  12. Alex Says:
    August 11th, 2007 at 12:11 pm

    Ouch is right. That premium does seem high, but as you point out, you’re being punished simply for living in an area where there’s a heavy claims history. This can be a problem here in the UK too. We’ve had dreadful flooding across England this summer and many people are finding their renewal premium has rocketed as a result. Perhaps we should all be looking for new careers in the insurance industry?

  13. Foxfollower Says:
    September 6th, 2007 at 1:51 pm

    This is an annual “kriptonite” zap,isn’t it. Along the Southcoast Massachusetts it’s radical right now. I have flood insurance that I carried over from a beachshack (read: mangeled heap of stucco)in Wareham at Swifts Beach to a farmhouse/colonial a 3/4 of a mile inland because I was grandfathered before everyone cut us off! ‘m paranoid now and won’t be able to get it again, so I keep writing the checks! Look at this – this is some of what’s going on around southeastern massachusetts!

    http://www.southcoasttoday.com/apps/pbcs.dll/article?AID=/20070906/NEWS/709060360

    Foxfollower – Wareham, MA

  14. Ernesto Says:
    December 4th, 2007 at 11:01 am

    Your premium is pretty steep; I’m guessing you live in Florida or somewhere near the ocean. Considering a hurricane wipes out nearly every coastal city about once every 40 years, your rates are understandable.
    Back in the day, insurers helped pass the cost along to those of us nowhere near the ocean. I remember Nationwide hiking my homeowners premium after hurricane Andrew. When I called my agent, he explained it was all the wind claims in Florida. When I pointed out I live in Ohio, he didn’t have a good answer. Soon after, I switched to a mid-west based insurer with no coastal exposure (and saved a ton).
    I’m a bit worried reading comments about people disputing their replacement costs. I could fill a bucket with what most people don’t know about rebuilding a house. You’ll feel stupid saving money on premium when your house is not properly rebuilt after a major claim.
    If you think your insurance company is full of beans (and it’s worth $7.95) check out http://www.accucoverage.com/ (I’m not affiliated with this site) they’ll generate a replacement cost for your house.

  15. Jerry Says:
    January 10th, 2008 at 9:34 pm

    That sucks! I’m sorry to hear about it. You might want to shop around. I was just curious about our homeowners insurance policy and called around and found a better price. It wasn’t a HUGE savings but enough that I made the switch. Good luck! I hope it helps and leads to a better premium next year:)

    Jerry
    http://www.leads4insurance.com

  16. Ed Says:
    January 13th, 2008 at 8:31 pm

    My homeowner’s cost was never more than $600 per year, but I consider that to be excessive. I’ve been in my house 20 years (paid off) and have had only 2 small claims. I cut it back considerably, to $350, in effect self-insuring. If my house is destroyed, I have to pay a significant portion. However, considering how small that possibility is, I’m willing to live with it. I live in an area with tornados and have had 2 major ones in my vicinity in the last 50 years. I’d be happy to collect all the premiums from my neighbors and insure them.

  17. Cathy Says:
    March 24th, 2009 at 9:06 am

    My homeowner’s cost has gone up every year since I moved into it in 1999 ($495). Last year it was $707.00 and now it is $864.00 for my 2009 premium. I was told by High Point (my insurance carrier) I have the Premier Inflation Protection Plan which is the best. I really don’t understand it. I was told with the cost increase of building supplies, my house would be re-built without a problem of inflation rates. But with this economy…. didn’t building supplies go down?

  18. Ian Roger Says:
    May 1st, 2009 at 4:27 am

    This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.
    Ian Roger
    Home Insurance

  19. Laurie Says:
    February 2nd, 2010 at 9:05 am

    I just received my 2010 premium and it went up $100.00. The letter said this “insurance Premiums have been adjusted and continue to reflect the expected cost of claims.” I live in Akron,In. (11years)and have never had any claims on my homeowners insurance or auto for that matter. There has been no tornadoes (there was flooding in the county but not any in my area)When I first got the insurance in 2003 it was $466.00 (91,000 value) now it is $830.00 (119,400 value)and I know this has to cover the mortgage, but it will not cost $119,400 to replace it, as I have a 1400 S.F. Double wide on 6 acres. Am paying for the claims that were filed by any person insured through State Farm. Is this a fair concept. If I have a car accident my insurance premium goes up. I believe that is how it would be if a person filed a claim on their howeowners insurance.

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