Homeowners insurance continues to rise at alarming rates. Additionally, some new home buyers are facing challenges in finding companies to cover their property at all; and existing homeowners are seeing policies cancelled after years of rate increases.

What’s going on with property and casualty insurance?

  1. Buyers should be aware of Chinese drywall and other inferior materials. Recently, Consumer Reports has highlighted an issue with faulty Chinese drywall. Bought cheaply, thousands of complaints are stating that the product is not only inferior and likely to fall apart, but is actually a health hazard. The problem is not widespread, but presents enough of a trend that insurers are covering their bases by excluding it from coverage or raising rates as a preventive measure against possible claims.
  2. Location, location, location – and if your dream home is on a coastal waterway, be prepared to pay more for your homeowners insurance. What’s more, insurance companies are requiring separate deductibles for coastal property – primary insurance and secondary wind, water or specifically hurricane risk. If you file often, be prepared to go without; frequent claims cause insurers to cancel or not renew.
  3. Lower home prices are also driving rates up and replacement or rebuilding coverage down. Even if the value of your home falls, shop around for the best price on covering your home in the event of a disaster, and make sure your coverage is adequate.
  4. And if things aren’t bad enough, bad credit scores continue to drive up rates on homeowners insurance (as well as auto and other insurance). People with poor credit are considered to be a high risk for responsible behavior and an indicator of future financial trouble. With unemployment rates high and home prices falling, poor credit is driving up rates across insurance plans.

Understand your current homeowners insurance policy and the coverage you are paying for. Shop around – it pays off to compare and switch insurers for better rate plans. And remember, all kinds of market trends can factor in what you pay – and what you get for it.

/kh