Homeowner's Insurance: Up, Up, and Away

Homeowner's Insurance: Up, Up, and Away

February 24, 2021

As much of the country is still shoveling its way out of snow, waking up on a late February morning to a forecasted temperature of the mid-70-degree range certainly has its perks. Living in the sunshine state can also come with a few trades off, including the potential risks for hazardous natural disasters, including hurricanes and floods. While this time of year is not known to bring thoughts of hurricanes, it is time for my annual renewal of my homeowner’s insurance. Considering the destructive nature of natural disasters and the potential impact on your home, It shouldn’t come as a surprise that Florida has one of the highest home insurance rates in the United States. Not only do Florida residents have the highest insurance costs, but they also have the country’s highest insurance rate increases. Since 2016, the average cost hike across the U.S. was less than 11%. In Florida, that rate increased three times higher, at almost 35%.

Within the last several months, we have had a few clients reach out to me regarding the substantial rate increases in their homeowner’s insurance cost, and then it reached a bit closer to home. My mom had her renewal notice, with about a 50% increase and now mine at 66%. That almost makes the 35% higher sound like a bargain.  

 The average costs of insurance 

Several factors can affect your insurance premiums. Your home’s location has a significant impact on your premium rates; if you live in a typical hurricane-prone area, expect to pay more. However, other factors that come into play when determining your premium, including your age, gender, marital status, claims history, and even your credit score, can impact your premiums. According to bankrate.com, the average cost of homeowner’s insurance in Florida is $1,736 per year for a $250,000 dwelling.   

 Make a call to your agent

A premium increase isn’t an automatic reason for an immediate switch of carriers but should be the catalyst for a call to your insurance agent. Many insurance companies don’t want to lose your business; you may be able to find acceptable ways to reduce your premium or negotiate a lower rate. Consider relatively simple items like a wind mitigation inspection or updating your insurance company if you have recently replaced your roof. Those items could reduce your premium with minimal effort and expense on your behalf. For example, several local qualified companies can perform wind mitigation inspections for less than $150. The potential cost-savings per year can easily outweigh the relatively low cost of the service. 

 If you change carriers

Sometimes, it makes sense to find another carrier but remember the grass isn’t always greener on the other side. Changing carriers can mean lots of work on your behalf. First and foremost, understand your insurance decisions should not be a mere function of finding the cheapest annual premium. We all like to save money but saving money at the expense of quality can sometimes be foolish. It is essential to review your insurance carrier’s financial strength and choose one with a reputation for good customer service. You want to select a company with the financial backing to cover a claim in the event you ever need to make one. A knowledgeable insurance agent should be able to help you navigate carriers and products. If you are researching insurance carriers on your own, several websites provide statistical, financial, and consumer ratings to help you find the best companies—some of the most common include; AM BestStandard & Poor’s, and Moody’s.

Be prepared for additional expenses

Not only will you have the responsibility of selecting a carrier, but many insurance companies are also equally selective in the homes they want to insure. Gone are the days where you pick up the phone and have homeowner’s insurance in minutes without an inspection. Today insurers want to know what they are insuring and may require updates to your home before binding your insurance. This very situation happened to my mom. Yes, she kept her annual premium in line with rates from the previous year; she also incurred the cost of a new water heater and an updated electrical panel.  

 As homeowner’s insurance rates continue to increase, we encourage you to review your insurance policies and consider shopping for better, less expensive coverage options. Keep in mind moving to another carrier with a lower premium is not always your best option. We encourage you to talk with your trusted insurance agent to determine what makes the most sense for you and your home.

This material is provided as a courtesy and for educational purposes only. All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed.