Homeowners insurance companies adjust rates from time to time based on a variety of factors. Some of those factors are directly related to individual policyholders, and others have nothing to do with specific homeowners. If you’ve received a letter from your insurance company informing you that your rates will go up soon, you might be able to get them back down.
Why Do Insurance Companies Raise Rates?
If your insurance company sent an inspector to your home and shortly afterward informed you that your premiums would go up, it’s probably because your home needs repairs. For example, damage to the roof and foundation can make your house more likely to suffer serious damage in a storm. If you make repairs now and provide proof to your insurance company, it may consider your home less risky and reward you by lowering your premiums.
Filing several claims, especially in a short period of time, can cause an insurer to raise your premiums. In addition, a large number of claims submitted by people in the same town or neighborhood can raise your rates, even if you didn’t file a claim yourself. An area that is prone to severe storms or has a lot of burglaries often means higher insurance rates for everyone.
Your insurance score, which companies use to set rates, depends partly on your credit score. If your credit score has dipped, paying down credit card balances and making payments on time can boost your score and may eventually lead to lower homeowners insurance premiums.
Sometimes insurance companies raise rates across the board if they paid out unusually large sums of money for claims related to natural disasters. Insurers may also increase premiums if construction costs have risen substantially because settling claims will be more expensive. Companies want to spread the cost around to everyone so they can still earn a profit.
What to Do About a Planned Premium Increase
If your homeowners insurance company has notified you that it plans to raise your rates, call to ask why. If the insurer mentions any reason specifically related to your home or your area, look for changes you can make. For example, if there have been a lot of break-ins in your neighborhood recently, offer to install deadbolts and a security system in exchange for a reduction in premiums. Repairing your home to make it less susceptible to storm damage can also lower your rates.
You might qualify for discounts if you have multiple policies through the same company, haven’t filed a claim in several years, or are a first-time homebuyer or a senior citizen. Ask your insurance company if you qualify for any discounts. If you currently have a low deductible, raising it could automatically lower your premiums. Explore all options with your insurer.