my homeowners insurance goes up each year also and it has increased again this year by 150.00! I live in Arkansas have had this policy for over 10 years and have never had a claim. in the past 10 years my premium has a little over doubled. Each year my agent tells me that the increased due to an increase in the rising cost to replace the home if it is ever destroyed. what if I didnt want to re build my house? Just pay off the loan with a little extra to put a down on another house. I have increased my deductable to try to stave off the rise in insurance premiums. i have a replacement cost policy and before i talk to my agent once again this year i need a little education. the mortgage co says I need to be insured for the loan amount. the insurance agent say I need to be insured for at least 80% of the cost to replace the home. do I have any other options, like not going with a replacement cost policy? if so, how does that work?
Insurance Education
- Thread starter rar4710
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I can tell you are with a captive company, so I would get quotes from an Independent agent, who will shop this out to 10, 20 pr more companies for you.
I would not be surprised they can save you at least 1/3 of what you are paying.
I would not be surprised they can save you at least 1/3 of what you are paying.
who do you want to be happy if your house burns down, you or the bank? if you under insure your home, you are responsible to pay the difference, in rebuilding. you may end up living in a tent in the back yard. but you saved 200 last year... on your homeowner ploicy..
- 117
Besides the cost of rebuilding (most policies will not pay out unless you rebuild), the number of weather related claims have went up drastically. Everytime you hear thunder and see lightning--cost rise. Every hurricane that hits the USA, cost rise. Everytime there is a snow or ice storm cost rise.
Another thing to consider, credit is a huge factor in rating. If your credit has gotten worse, your rates could likely go up.
Another thing to consider, credit is a huge factor in rating. If your credit has gotten worse, your rates could likely go up.
With insurance, the whole point is to be put back in the same position you were in before the loss and you are not supposed to profit from the loss. With that being said you are required to rebuild the home after the loss (there are exceptions, Chubb has a cash out option).Your rises in insurance premiums at $150 per year are negligible (thats only $12.50 per month that your mortgage is increasing if you have it escrowed). It is difficult to understand at this day and time because you have never seen a loss, but trust me you want a replacement cost policy and odds are your mortgage company will require it. When I update my client's info with the mortgage companies that specifically ask if its a replacement cost policy, if not they will force place coverage.
As to the mortgage company only requiring you to purchase for the loan amount; that's because they don't care about you as a customer, they only care that if you have a total loss your loans paid for, they could careless that your now homeless.
i know nothing about the insurance in your state as it differs from state to state, but there is a bill in Florida, that is going to require consumers to provide proof that they are applying the funds that they filed a claim for to fix the damage to the home, or they will no longer get the payments from the carrier. Also, in Florida (and I assume its the same everywhere), if you insure the home under 80% of the replacement cost AT THE TIME OF THE LOSS (this is why you need the inflation factor in your policy which increases the dwelling coverage every year) you have to share the loss with the insurance company, above and beyond the deductible and depending on the amount of the loss and the difference in RC to the actual insured value, it can and will get very expensive very quickly and you will be very sorry you didn't cough up an extra $150 per year.
Here is the coinsurance Formula: (Did / Should) x Loss - Deductible = Payment (from the carrier). With this formula if you were to insure your home to $150,000 when it should have been insured to $200,000 and you had a $100,000 fire loss, you would only get $74,000 of the $100,000.
By the way, be happy you don't live in Florida, I know of only 3 companies in the entire state writing new business (only 49 companies), that didn't have rate increases, most increases have been in the $400 - $800 per year range.
I understand you want to save money now and we all do, but insurance is not something I would cut corners on, take it from professionals that have seen people make huge mistakes and regret it. You may get away with cutting corners now, but if it catches up to you, you can end up paying a lot more.
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Actually, even if storms hit anywhere in the world costs rise here. for many reasons, but specifically because the reinsurance companies will raise their rates worldwide, which will affect us. I have heard that 2011 was one of the worst years so far in history for the insurance industry due to the number of catastrophes worldwide, but also here in the US.
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I had a guy in SC who had a policy with a 5% storm deductible on a 400k home on the coast. He wanted it because he wanted the lower rate. I advised him that he is sitting at like 20k for a deductible but he says that he'll have to take responsibility because he knows the risk.
3 weeks later, Irene comes along. I've thought about calling him back to see how he is doing. I'm glad I didn't write him after all.
3 weeks later, Irene comes along. I've thought about calling him back to see how he is doing. I'm glad I didn't write him after all.
B Ray
Expert
One of the best things to do, is to locate another agency and have them give you a quote, you may be with a company that has increased your replacementment cost, which is normal but they may have had additional rate increases.. In Arkansas, I know an carrier that had an increase of 25% in one year, so it could be multiple reasons, why you rate has gone up.
I am unsure where you are located, but if you need a quote, you can send me an email at [email protected] , I am from Arkansas
I am independent and can shop around to locate , the best price that I can,for you ..
I am unsure where you are located, but if you need a quote, you can send me an email at [email protected] , I am from Arkansas
I am independent and can shop around to locate , the best price that I can,for you ..
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