We help you understand the reasons why homeowners premiums can increase and ways to help keep your rates low.
One of the most common questions we get asked as insurance agents is, “why did my homeowners’ insurance premium increase this year?” While there are several factors that determine the rate you pay in premiums to your insurance company it is largely based on:
–where your home is located: Certain towns represent a higher risk to insure than others. In Massachusetts, homes located in towns closest to the coast face a better chance of incurring damage in a coastal storm. Therefore, in general, homes in Scituate, Cohasset, Gloucester, and Nantucket are going to be more expensive to insure than homes in non-coastal areas such as Norwood or Worcester.
–the age of your home: Older homes are more likely to have problems and more likely to experience a claim than a newer home. Older homes may have issues with electrical wiring, plumbing, the foundation, or the roof that a newer home may not.
–your insurance score: A person’s insurance score is comprised of a number of factors including their claim history and whether or not their home has certain safety features or not. The lower a person’s insurance score is, the higher their premium will be. Insurance companies will update your insurance score upon renewal and may adjust your rates as necessary.
Many of the reasons why your rates could increase have nothing to do with you or your home. Homeowners’ premiums can also be affected by:
- the financial stability of your insurance carrier (company) and their reinsurance company (a reinsurance company is your carrier’s insurer that helps them pay for claims): For instance, if there’s a high number of claims submitted in a given year due to people’s homes being damaged by natural catastrophes such as hurricanes and tropical storms, it’s likely that the rates the following year will increase.
- Inflation: the cost of building materials to repair or rebuild homes can increase from year to year thereby increasing the amount insurance companies have to pay out in claims to homeowners to allow them to rebuild after a loss.
How can I keep my homeowners insurance premium down?
- Choose a higher deductible: A general rule of thumb is that the lower your insurance policy’s deductible is, the higher your premium will be, and vice versa. If you are a responsible homeowner and have never submitted a claim, you may want to think about raising your deductible, as you only have to pay a deductible when you file a claim. So if you are currently paying a $500 deductible, increasing that deductible to $1,000 or $1,500 will lower your premium.
- Safeguard your home: Making upgrades to your home that help it withstand storms and make it more disaster resistant, may results in lower rates. Upgrades to modernize your electrical, plumbing or installing a new roof make reduce your home’s risk of wind, fire or water damage and may help lower your premium.
- Think carefully before submitting claims: Your claim history impacts your insurance score and similarly your premium. So if lightning strikes the transformer outside your home sending a surge of electricity that knocks out your microwave and your toaster, you may want to pay for those out of pocket rather than submitting a claim to pay for the damages. Your McSweeney & Ricci Account Manager can help you weigh your options and will advise you as to the best course of action.
- Take advantage of available discounts and credits: The declarations page of your homeowners’ insurance policy lists all the discounts and credits you’re receiving. Your McSweeney & Ricci Account Manager can review your current coverage to ensure you’re receiving all the discounts and credits you may qualify for. For instance, bundling two or more policies (such as a homeowners and an auto policy) with the same insurance company can save you up to 20%. If you’ve never submitted a claim, you may qualify for a Loss-Free discount and some carriers offer a discount for first-time homebuyers or a loyalty discount for being a long-term policyholder. McSweeney & Ricci has partnered with more top-rated insurance companies than most agencies our size, which allows us to offer you competitive rates and a wide range of discounts.
- Before you buy a home check the CLUE (Comprehensive Loss Underwriting Exchange) Report: The CLUE report contains the insurance claim history of the property and can help identify potential problems or issues that need to be fixed.
As your agent, McSweeney & Ricci is always looking for ways to help keep your costs low, while ensuring you’re protected by the proper levels of insurance coverage. With over fifty years of experience protecting Massachusetts homeowners, our insurance experts provide you with affordably-priced insurance protection and advice you can trust. We offer conveniences such as in-house registry services and an in-house claims department as well as immediate issuance of insurance certificates. For additional information or questions regarding insurance for your home, auto, or business, contact us today.