How to Handle The Increase In Premiums

Insurance premiums are going up. It doesnt matter which state you live in or which insurance company you are insured with, insurance companies are raising rates. What does this mean for you? What can you do about it?

Insurance premiums have been increasing steadily since 2000. However, the events of September 11 have only sped up the process. The companies are using this tragedy as an excuse to finally get the higher rates they have always wanted.

Homeowners Insurance

Homeowners insurance has long been the least profitable line of insurance. Insurance companies have always written homeowners policies with the goal of combining it with the more profitable auto policy. Water damage claims, weather related catastrophes and the latest-mold-have wreaked havoc on the homeowners segment of the insurance industry. As a result, the insurance companies have finally made a concerted effort to make this line of business more profitable (i.e., higher premiums).

Companies arent just raising the premiums; they are increasing the amounts that homeowners need to be insured for. The amount that the house is insured for reflects the cost to rebuild the home from the ground up in the event of a total loss, not its market value, appraised value or purchase price. Therefore, 25% of the rate increase may be due just to the increase in dwelling replacement coverage, not including liability.

What are your options? 

1. Do not file small claims. Frequency of claims filed will lead not only to higher rates but may lead to cancellations. If you are cancelled, premiums on the replacement policy could be two to three times higher.

2. Raise your deductibles to a minimum of $500.

3. Get the credits you deserve. The declarations page of the policy usually lists all applicable credits. Companies will offer multi-policy credits, home protection credits, etc.

Automobile Insurance

For many years, auto insurance premiums remained stable. Increases of 5% to 10% were usually the largest a company would make. These increases would come once every three or four years. Now, the insurance companies have started putting through one or more rate changes in one year. These changes are not restricted to certain regions of the country. We are seeing double-digit increases in almost every single state. Vehicles are becoming more expensive to repair and the over-litigious society is increasing the claims payout.

Another reason for increases is that insurance companies may change the class code (a numerical code that signifies how a car is used and by whom) as well as territory revisions. It is imperative that, upon renewal, you review these items carefully. This is usually the first clue that something other than the rates have changed.

The driver class, territory, credits and surcharges may all change based on information the insurance company can get without your knowledge. On the other hand, vehicle usage is handled differently. Many insurance companies send out renewal questionnaires that ask you how your vehicles are used. When you receive one, CALL YOUR AGENT! Why? Because if you answer these questions differently from the way the initial application was filled out, your rates will change.

Keep deductibles high and avoid making small claims! Much like homeowners insurance, small claims will be one of the main reasons why your auto insurance premiums will increase.

Visit http://www.TheMoneyExpert.com for expert assistance in making sure your insurance is in order.

-Ryan Novak is Vice-President of NIA Property/Casualty Insurance Clearinghouse, the recommended expert alliance of http://www.TheMoneyExpert.com

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