Avoiding the Rising Cost of Home Insurance

If you’ve noticed the rise in natural disasters lately, you’re not the only one. Insurance companies, or rather reinsurers, the insurance companies that cover your insurance companies, also have. Hurricane Irene is the most recent example of a natural disaster that has caused extensive damage; but no doubt that many of us could list 5 natural disasters that have occurred in the last two years off the top of our heads. With this damage comes a lot of cost, and someone needs to be able to pay for it. Unfortunately for homeowners, most of the time it ends up being them.
Chris Kissell, senior managing editor of Insurance.com said that insurance rates have already started to rise, and that they’re only going to get higher in 2012. This is bad news for homeowners, who want to protect their home without paying exorbitant costs to do it; and it’s also bad news for home buyers, as many mortgage lenders won’t approve you for a mortgage without insurance in place. Because home insurance doesn’t come with the same strict provincial rules and regulations that auto insurance does, rates for home insurance will vary from provider to provider. But, Kissell says, not even the lowest rates today will be offered in 2012, with rates going up “across the board.”
So why the increase? It’s more than just a matter of reviewing most recent events and getting a bad gut feeling. Environment Canada said that a wind storm seen in Goderich, Ontario last week was the worst storm in Ontario history and that these types of severe weather systems are only going to increase in numbers and become worse. So, reinsurers and insurance companies need to protect themselves against the oncoming costs. But, so do homeowners and home buyers who want to be approved for a mortgage. So how can they?
One of the biggest ways is to limit the amount of claims you make. Just like car insurance, the more claims you make, and the more money you ask your insurance company to pay, the more your premiums are going to go up. So if you have some minor flooding in the basement that you can probably take care of yourself, do it. The upfront costs will save you a huge headache and your savings account further on down the road. If you’re not sure whether or not damage incurred by your home is significant enough to make a claim, you can always call your insurance company and ask them. Generally, they’ll be upfront about whether or not your situation calls for a claim to be filed or not.
Something else to keep in mind when looking at the number of home insurance claims you make – many insurance companies have a ‘cap’ on how many you can make before you become too great a risk. For some companies it’s three claims while others allow five. But go above that maximum claim amount and you might find that no insurance company will insure you at all. That could be a huge factor in your next home, as it could also mean not being able to get a mortgage at all.
Yes, home insurance rates are going to go up. But that doesn’t mean that now is the time to panic. Do your due diligence, shop around for the best rate, and watch how many claims you make once a policy’s in place. You might find that the rate increase doesn’t even have that much impact on you if you do.