Home insurance increased? Here are 4 reasons why

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The benefit of locking in a fixed rate home loan is that you can make the same monthly mortgage payment until you own your home. But that doesn’t mean owners benefit from fixed monthly costs as a whole.

In fact, one expense that could easily increase from year to year is your home insurance policy. If your rates have recently increased, this could be the cause.

1. You filed a bunch of claims against your policy

The purpose of having home insurance is to be able to submit a claim in the event of damage to your property so that you do not end up with exorbitant bills. But the more money you ask your home insurance company for, the more likely they are to increase your premium rates once your policy is up for renewal.

Does that mean you shouldn’t file a claim against your home insurance policy the next time serious damage occurs? Not at all. If your home suffers $10,000 of damage and your insurance company will pay the whole thing minus your $750 deductible, then you definitely need to go ahead with a claim. Don’t be shocked if your premiums go up after the fact.

2. Other policyholders have filed numerous claims

Even if you haven’t filed a number of claims with your insurance company (or any claims, for that matter), if other local policyholders have recently filed numerous claims, your costs could rise along with theirs. . This kind of thing can happen following a storm or a major weather event. If an insurance company sees a large increase in claims in the same coverage area, it could raise rates for all insured homes in that area.

3. Construction costs are increasing

To determine the premium rate to which you are entitled, your insurance company will take into account the cost of replacing your home. But now, with higher construction costs, it may take more money to rebuild your home in the event of extreme damage. And so you might see your premium rate go up to reflect that.

4. You added a feature that results in higher replacement costs or liability

Certain home features can make your property safer and potentially lead to lower insurance costs. But if you install a swimming pool or hot tub, for example, you will almost always see your home insurance costs go up. Indeed, adding these features increases the risk of injury to your property. Therefore, you will have to pay more for an increase in liability coverage, which protects you in case someone gets hurt while visiting your home.

Plus, it costs money to replace a damaged pool. If you put one on, you could see your premiums go up due to higher replacement costs.

What to do if your costs continue to rise

If your home insurance premiums are getting unaffordable, don’t hesitate to shop around with different insurance companies and see if there’s a better deal out there. There’s no rule that you have to stay with the same insurance company forever, so explore your options if your premiums continue to rise year over year and it’s not due to stocks on your part, such as pooling or filing numerous claims.

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