Why the Price of My Home Insurance Policy Increase Every Year?
We put a lot of thought into finalizing the location, size, amenities, and overall design of our house before purchasing it. And after your dream home gets ready it becomes necessary to protect it with a home insurance plan. The factors you consider before finalizing your home play an important role in deciding the premium of your home insurance policy. Apart from these factors, a home insurance policy takes the reference of various other factors as well for providing the quote for your home insurance policy.
However, the price of premiums of your home insurance plan increases every year, and if you are wondering why, then you are not alone. You can be surprised to see the rates of your home insurance have increased. It can be because your property has become more valuable than last year. Or maybe because you have done some additional investments in it. Or did you file a claim against your home insurance plan? Many factors impact the cost of your home insurance premium and you must understand them:
Why does the quote of your home insurance policy go up every year?
Below we are mentioning the top five reasons that increase the rate of your home insurance policy in detail:
- Claim Filing: You purchase insurance to help to offset major expenses cost if something unexpected happens. When it happens and your insurance plan pays you back, you feel really glad. However, if you file a claim for your home insurance policy, your insurance premium rate may increase. So, the claim whether is for small or large will affect the premium of your home insurance policy.
- Attractive Nuisances and Change in Property: Even though one clause to decide the premium of your property is a square-foot area of your home, but you make major renovations in it, your home insurance premium may increase. Changes in your home that are increasing the value of your property for sure boost the premium of your home insurance. In addition to this, a trampoline or swimming pool, which is known as 'attractive nuisance' increases the value of your home insurance. And if you add these 'attractive nuisance', your home insurance increases.
- The Weather Conditions of Your Area: When your home is impacted by severe weather, then you may require to rebuild it, or sometimes you may need to replace it completely. The impact of catastrophic weather can destroy many homes in your neighborhood, which can increase the cost of construction material and laborers. In such a situation you have to claim for your home insurance, which may impact its next year's premium.
- Inflation Increases Insurance: The insurance companies start responding by increasing their rates as inflation increases. This is because the items in your home will cost more than their price last year. With the escalation in the price of home equipment and appliances, the insurance rates adjust. The insurance industry references the index of consumer price for measuring inflation and accordingly adjusts its rates. It is one of the biggest reasons why owners of property find the increase in home insurance policies even if nothing changes in their property or neighborhood.
- Your Area is At High Risk of Burglary and Other Such Incidents: If the area you are living in is facing issues like burglary and theft for some time, then there are chances of an increase in your home insurance premium for the coming year.
Ways to Lower the Price of Your Home Insurance:
The above-mentioned are some of the top factors that increase the price of home insurance, however, you cannot control every factor such as weather conditions, burglary, etc. The good news is we have some tips that you can follow to lower your home insurance premium. Mentioned below are some of the ways by which you can save on your home insurance:
- Avoid claiming for small fixtures that come in day to day life and try to fix them from your pocket. For example, a broken window can easily be fixed by you instead of doing it through insurance.
- Try to install safety measures in your home such as installing a fence around your swimming pool, using surge protector, carbon dioxide or smoke sensor, etc. and inform your insurer about the same. Finding this, your insurance provider will offer you a good discount.
- While choosing a location for your home, try to avoid areas that have high chances of a flood, storm, earthquake, etc. However, if you have to live in such places, then making a house of brick and stone in areas that are prone to storm and flood can reduce the claim.
- You can get your home inspected by fire force and get a certificate from them. This certificate can be submitted to the insurance provider for getting a discount on your insurance.
- Shooting up the deductibles can help you in lowering your premiums. No insurance plan is designed to provide coverage for small contingencies as well as setting up a high deductible can bring down your premium largely.
- Ignore the land value completely when taking a home insurance plan. This is because land under your house will never be robbed or/ and get destroyed in case of fire. So, keeping it far from insurance can reduce your insurance premium.
- Do not opt for attractive but unnecessary add-ons or riders, however cheap they seem.
- It is advised to buy all your insurance plans like cars, houses, etc from one insurance provider. Doing this can give you great discounts based on purchasing multiple insurance plans from one insurance provider.
Summing It Up!
Insurers are as well not lacking behind their sob stories related to claim. Many home insurance providers offer inflationary clauses for keeping the increasing price of resources, related labor, and land in mind. Because of the rising number of personal accidents and natural calamities, insurance claims have increased. Moreover, the insurance companies tend to bear a heavy share of the expenditure of claim, it makes sense for them to levy a higher premium amount. However, using these tips can help you to reduce the price of your home insurance policy.
Written By: PolicyBazaar - Updated: 31 July 2020