Homeowners Insurance Premiums

msefren

msefren

Dryer sheet wannabe
Joined
Sep 23, 2015
Messages
23
Hello. My wife (65) and I (66) have been retired for several years. I was wondering if anyone else has been apalled by escalating homeowners insurance premiums? We have owned our home in Nebraska for 16 years and have never had a claim. Our premuims have gone up $700.00 since 2014.

When I contact our insurance carrier, the only option given is to increase our deductible to 5k. I was told by our carrier,as an aside, that they could drop our insurance for any reason in the future including our age :mad:



Thank You!!
 
Have you sought quotes from other insurers? Shopping around every couple of years is a good way to help moderate rate increases.
 
Thank you for the reply. I do shop for quotes each year our policy renews however, the quotes that I receive from other insurers are usually much higher. I think we may be stuck with what we have. I just wonder at what point the premiums moderate if ever?
 
Premuim on our home is $1781.00 Tax value on home is $245,337. So it may not be that out of line based on your responses.

Thank you (I think);)
 
Have you tried a broker to help you shop/compare quotes? I used Answer Financial a few months ago, and they saved me a good chunk of change (and time!).
 
I just checked my tax assessment and the valuation for taxes on my dwelling is only $152,400. Entire property valuation for taxes is $196,000. My homeowners insurance is due soon so I have the bill right here on my desk. My homeowners insurance has a $232,988 limit on the home itself with $500 deductible but a $1,00 deductible for wind/hail damage. The yearly premium is $890.16. That is less than $15 increase in premium since last year. Maybe you can use this for comparison. I have less house but much lower premium. I live outside city limits so their are no fire hydrants close by. By the way, I had a claim for a new roof due to hail damage on my then house about 4 years ago, a claim of over $15,000 also a different insurance company.

Strangely enough, the house I lived in less than 3 years ago was worth twice what my current home is valued at but the insurance premium was 15% less than my current home. Different state but still makes no sense why the huge discrepancy in homeowner's insurance rates.

I started shopping for homeowner's insurance several years back because State Farm, who I had insured with for over 35 years was coming up with double digit rate increases each and every year.
 
Copying and pasting what I posted in my thread from a few months ago when I was comparing homeowner's insurance quotes:
----------------------------------------------------
My summary:

1) Dwelling coverage.

Many homeowners are underinsured but don't realize it until a major loss occurs. Make sure you get replacement coverage (NOT ACV - which is the depreciated value...hadn't realized our policy on our rental property was ACV - they snuck it in in the small print!). Replacement coverage means cost to rebuild, not market value. Don't trust what your agent's calculator tells you, estimate it yourself via a tool like building-cost.net. Agents may underestimate upgrades in your home, and, in an effort to show a lower premium and get your business, you end up underinsured.

2) Other structures

Yes, you can reduce this - we actually took ours to $0 since we purchased a townhome and have no outside structures. I verified that our attached garage, paver patio, and lanai (which is under the roof) are covered under Part A dwelling coverage. However, no policy covers the rescreening of a lanai, according to our agent (strange!).

3) Personal Property

Again, check to see if it is replacement cost or ACV. If ACV, it is the depreciated value...so even though you have to pay full price for a new couch, if you have an ACV policy, they will only pay the depreciated value based upon how many years you owned it (if I am understanding this correctly).

Check the fine print. Sometimes they will sneak this in as ACV and you need an endorsement added that states you will be covered at replacement cost.

We did a whole house inventory and came up with a number that was half of what some policies offered - so we would have been overinsuring in this case. We chose a policy that covered the amount we feel we'd need. Saved us some $ esp since we had increased the dwelling the coverage. It also kept us from underinsuring, as we had underestimated how much it would cost to replace everything we own (we don't have tons of fancy furniture, etc., but it still really all adds up!)

We plan to use this app to do a more formal inventory and recording when we have a bit more time: https://knowyourstuff.org/

4) Loss of Use

Sources said this should cover rent for at least 2 years' time after a total loss, to allow for rebuild time. Many companies require you to use the whole $ in the first 12 to 24 months, even if you haven't exhausted the limits. The policy we chose requires us to use it up in 1 year's time - not ideal, but we settled for it b/c we liked the other features of this company compared to the competitors.

5) deductible

Already discussed above - go with highest you can afford to self-insure for and only make a claim for large losses.

One last great resource I found - researching the # of complaints and type of complaints at https://eapps.naic.org/cis/. I saw a huge difference between companies, and I could see certain ones had a lot of complaints for canceling policies and claim denials. This sealed the deal for us on which company we chose.
 
We have USAA.

Until this year they only had replacement cost baked into the equation. Also, personal property was always estimated high.

This year I noticed ranges of value on the web site, so called. I worked with someone on the phone to pick appropriate values, and lowered the premium 15-20%.

35 years with no claims, same company. ~ $1,000 annual in New Jersey.
 
Indiana - home value replacement cost $400K - deductible $1,000 - premium $985
 
You can't really compare homeowner's rates from one state to another, it just doesn't compute. The rates are different because they are different states, different geography, different weather patterns, different fire protection, construction, age of dwelling, etc. It is always best to compare your homeowner rates to your neighbor's homeowner's rates with similar home values, age and construction. What I pay in Texas reflects our propensity for hail storms, hurricanes and windstorms. Someone in another state might not have those issues, so rates can be lower.

I just retired from thirty-five years with property and casualty insurance companies and homeowners insurance has not been a profitable line of business for most companies when looked at nationwide. They are raising rates nationwide to get back to profitability on that line of business.

What no one likes to hear is that they are getting a rate increase even thought they have never filed a claim. That is because the insurance company has to price their book of business for a large population of insureds, not individual policyholders. As the cost of construction goes up, insurance rates have to keep pace. Replacement cost and market value are two totally different things. Market value is determined by location, age and condition of the home and the accuracy of the taxing entity's appraisals. Replacement cost is determined by construction costs in your area which includes labor and materials.

One of the best things I ever heard an agent tell a customer when she wanted to lower her coverage amount was that he did not ever want to stand with her across the street for her burning house, watching the fire fighters putting out the fire and have to tell her that she did not have enough coverage to rebuild her home. He was being honest, not trying to fluff up her premiums. Look at the cost of new homes in your area versus the cost of existing homes. The new homes of equal quality are always higher, and that reflects the cost of construction of new homes. That is what you are insuring for.

I don't like paying premiums any more than the next person, but I do want to protect myself from a large financial loss. The same thing goes for car insurance. A good portion of what you pay is due to the fact that 20% or more of the other drivers are not buying insurance and you are protecting yourself against their negligence and financial irresponsibility.
 
rdy2go thank you for an informative post.

Our rates have been pretty steady, although one year I did raise the deductible to $1,500 to lower the premium a bit. This is a timely thread because Friday I just received the notification that the premium is going up by ~$80 this year so not too bad.

And as rdy2go notes the "guaranteed replacement" value on the policy is far more than the house would sell for. I suppose that also covers replacement of furniture, clothes, camera stuff, and all the other [-]junk[/-] treasured items in the house.
 
Walt34 said:
I suppose that also covers replacement of furniture, clothes, camera stuff, and all the other [-]junk[/-] treasured items in the house.
Click to expand...

When I was researching it recently, household items were covered under the "personal property" line item (if you check you'll see how much, it's usually a percentage of the dwelling coverage). Check to make sure both are for replacement cost, not "ACV" - actual cash value (depreciated value).
 
What I could never understand and was never properly explained to me is why when insurance rates keep rising each year it is frequently because of the perceived increase in value of my home. But when I look at either what it would take to rebuild my house or buy another comparable house that cost is lower?
It was usually due to either the insurance company or the local agent raising the value of my house. When in reality the true value never rises. Sorry for rambling but this has happened many times in the past 35 years and after arguing with our agent we've gotten them to lower the value to what it previously was by showing them what houses are selling for and being built for.
Apparently some insurance companies have a built in inflation factor for houses.
 
That's usually the way it goes.
 
folivier said:
What I could never understand and was never properly explained to me is why when insurance rates keep rising each year it is frequently because of the perceived increase in value of my home. But when I look at either what it would take to rebuild my house or buy another comparable house that cost is lower?
It was usually due to either the insurance company or the local agent raising the value of my house. When in reality the true value never rises. Sorry for rambling but this has happened many times in the past 35 years and after arguing with our agent we've gotten them to lower the value to what it previously was by showing them what houses are selling for and being built for.
Apparently some insurance companies have a built in inflation factor for houses.
Click to expand...

Yes, some companies do have inflation factors built in to their systems and you should be able to reject that as long as you are within 100% of replacement cost. The factors are supplied by an outside vendor to most companies that keeps up with cost of construction by zip codes. You never want to get below 80% of the replacement cost or you will be assessed a coinsurance penalty if you have a claim.

Some companies have been known to push insureds to over-insure. Their reason is that they collect extra premium dollars and since only a small percentage of homes will be total losses, they get to keep the extra premium dollars. It is like a price increase without much chance of ever paying out that money. A good agent will fight those companies over that type of business practice.

One thing to remember is that an insurance policy is a one-year contract, and even thought you may have been insured by the same company for many years, they might not care enough about their policyholders to treat you well. The largest national companies are more likely to be this way than the smaller regional companies. Just because a company has the word "farm" in their name does not mean they are a friendly company. Farmers group is owned by Zurich Insurance Company from Switzerland and State Farm is one of the largest companies in the world. A good, local independent insurance agent is your best bet in being properly insured at a reasonable price year in and year out. No company is going to be the cheapest every year, but a good agent will keep their customers in the right company for their customer's needs and give you service when you need it.
 
As someone who has actually exercised their home owner policy, (lost it ALL to a wildland fire) I want to remind everyone of a few facts regarding home owner insurance and coverage.

1. You do not insure a home for it's value. You insure for the cost it takes to replace the home. In a fire, flood, tornado for example, that means the cost to clean up and get the lot ready for building. On my property, I spent nearly $100,000 to clean up due to all the toxic materials from the fire, the removal of the burned trees on our property including soil compaction after the tree root balls were removed. We had to replace our septic tank and leach field because the tree roots destroyed them when the root balls were yanked out of the earth with the excavator. There is a lot more in the cost than an appraised value of a home ready to sell compared to the cost to replace a destroyed home on a damaged lot.

2. Contents insurance should be somewhere around 70% of the home's appraised value. This will be enough to replace everything and be sure you have full replacement cost at today's cost for new items.

3. 'Other structures' includes stuff like patios, driveways, fences, outbuildings, basically any improvement on the land that is NOT the house. It adds up folks. In our case, we had an aluminum pontoon boat in the driveway. It melted. Aluminum melts at around 1900 degrees. The concrete it melted onto has moisture in it. The moisture turns to steam at 212 degrees. The steam pressure puts millions of micro fractures into the concrete. So, while you may think your drive way or garage pad or patio surface are o.k., they are not and will need to be demolished (at a cost), sent to a recycling center (also at a cost and is considered hazardous materials and can not go into landfill), then plans drawn (at a cost), permits paid (at a cost), inspections(at a cost) It's not enough to think a driveway is worth 'X' number of dollars in the value of a complete home listed for sale when it's been destroyed and must be removed, redesigned, repermitted, reinspected and reinstalled

3. Loss-of-use covers not only rent or place to stay while your home is being rebuilt, but one that is of equal quality of what you had. And not just the structure, but the loss of use of every personal property until you have replaced the item. If you lost a TV, this portion covers the cost of a TV to use until you are financially reimbursed for the one you lost.
It usually has a 2 year limitation. It doesn't have a dollar value limitation. What ever the cost that is incurred to provide you a loaner until you are paid for your losses, doesn't come out of the pot of money taken to replace the house. For us, they found us a home of equal or better quality, size and furnished it down to the last fork and spoon. They even restocked the toilet paper and tissue boxes. Placed a washer and dryer and a bottle of laundry soap. Bars of soap at each sink. Etc....

I highly recommend having a contractor quote you on what it would cost to clean up your lot in a disaster and replace it for a cost basis when deciding how much insurance you should have, then add at least 10% to that for any appreciation over the next 2 to 3 years when you should evaluate the costs anew.

I'd never wish a disaster of any kind on anyone, but I do wish that people understand the underlying costs of what it takes to sit back down in front of your TV, with a beer from your fridge in your house. It's so much more than just an appraised value of the undamaged home's value.
 
I want to also suggest that your deductible be priced at a limit that you could afford to walk away from. If you can afford to loose $5,000 on an asset worth around $750,000 to replace after a loss, then set your policy at $5,000 deductible. The more you can afford to take a hit on, the lower your premium is going to be.

In other words, set the deductible at a level that doesn't damage your quality of life if you had to exercise your policy.
 
Sunset said:
Wow.. I thought FL had high insurance, any reason yours is so low (high deductible, built on a hill on stilts) ?
Click to expand...

2 miles from the beach, 10ft above sea level, Concrete main structure. $10k deductible.

For a "Stick" house the insurance would be double even more. 1 mile closer to the ocean and that would be anyone's guess.
 
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