Why has my home insurance increased this year?

There are a number of reasons why home insurance premiums increase every year. Indeed, the average percentage increase rate per consumer may differ per insured property and from state to state. Although the market value of a property may have decreased, the insurance premium can still increase.

Some of the reasons for the increase in rates include protection against inflation, the frequency of natural disasters in an associated area, renovations or changes made to the property, and changes made to the insurance policy coverage.

It is important to note that…

1) Insurance companies may apply an increase on your premium as a guard against inflation. This is because inflation affects the cost of repairs that an insurance provider will have to pay in the event you make a claim under your insurance.

2) The frequency of natural disasters can also affect insurance premium rates. This is because insurance providers want to be prepared for claims from damages as a result of natural disasters. If the risk is perceived to be higher from one year to the next your premium will increase accordingly.

4) Changes made to a property and general policy changes will affect your insurance rate because of changes to your risk profile, rebuilding costs, and additional items to cover.

5) If you have made a prior claim under your insurance your perceived risk will be higher. As a result, the insurance provider will want to compensate for this higher risk by charging a larger premium.