What is driving the price increases? Post explained that insurance rates are based on shared risk. Insurance companies purchase reinsurance, which is insurance for insurers, allowing companies to limit their losses when claims are paid by spreading the risk of exposure to a major disaster. There have been a lot of global disasters in recent years, affecting the cost of reinsurance. The increase in reinsurance costs is then passed along to consumers.
Until a state law that was recently passed reducing the time a claim can be filed from three to two years, insurance companies were paying claims dating back to 2017 and 2018, when Hurricane Irma and Hurricane Michael came ashore. Repair costs today are higher than when damage originally occurred, aggravated by material shortages.
Additionally, there has been a tremendous increase in homeowner insurance claims. To better understand what has been happening and why, watch the
In 2020, 80,000 lawsuits were filed in
“What many people do not realize is that more than two-thirds of the money awarded in this type of lawsuit go towards attorney fees, not the homeowner,” said Post. “This is a big cost driver,” she added. Post referenced the survey
Predatory practices by roofing companies and other contractors have taken a toll as well. “Any contractor or sales representative telling you that you will not have to pay your insurance deductible is committing fraud,” said Post. “Don’t be tempted by such a statement.”
She also cautioned not to sign any papers concerning an Assignment of Benefits. She warns that doing so may sign away your rights and allow a contractor to sue your insurance company. Instead, she suggested doing a Direction of Pay, where an insurance company pays the contractor directly. For more information, she recommends consulting the website of the
What can a homeowner do to help control the cost of their insurance premiums? Post recommends keeping up with home maintenance, as you would your car. She noted that you wouldn’t ignore your tires until they frayed or exploded. A car needs regular check-ups and scheduled maintenance to make sure it’s in good working order, and to spot problems that require fixing.
“Consider replacing a shingle roof if it’s older than 15 years,” suggested Post. Tile and metal will likely need replacement after 25 years.
“Get a Wind Mitigation and 4-Point inspection examining roofing, electrical, plumbing and HVAC. This is particularly important for older homes,” she added. Inspectors will look at breaker boxes, water heaters, exteriors, roofs, driveways, plumbing fixtures, and more to find any issues that might affect your ability to get coverage. Additionally, these inspections might uncover a problem of which a homeowner was unaware, allowing the homeowner to fix an issue before it might become a major expense.
Ask yourself how much you are willing to self-insure. Premiums may be lowered by adjusting deductibles, coverage limits, endorsements and exclusions. Post cautions to closely read your policy’s details. If a premium decreases, find out what is no longer included in your insurance policy. Then speak to your agent.
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