Have you ever received your annual quote from your insurance company and thought to yourself, “Did I always pay this much?” If you have, then you are surely not alone. Many people often find themselves scouring through previous bills, or thinking back over the year, wondering how many claims they made, if at all any. Eventually, this may lead to the question, “Why is my home insurance rate going up?”
The amount which is quoted by the insurance company is never a figure which has been calculated on a whim, instead, there are several factors which are considered. This post explores four possible reasons why your home insurance rate may be increasing.
Change in Claim Trends in Your Area
When determining your insurance rate, some insurance companies inspect data through advanced analytics and use the result of this to determine the amount you pay.
One key piece of data they might analyze is the likelihood that you will make a claim based on a particular incident. This analysis could be made by observing the number of claims relating to that incident in your area. As an example, if an insurance company finds that there has been a steady increase in the amount of theft-related claims, then they might conclude that you are also likely to make a theft-related claim. This could lead to the company increasing the amount you pay for home insurance.
Renovations
When making any major changes to your home, you should let your insurance service know. Contrary to popular belief, many insurance companies do not base the price of their insurance on the market value of the house but instead on the amount of money it will cost to rebuild your house.
Essentially, this means that if you turn an empty storeroom into an extra bathroom or upgrade your basement from “the place where the washing machine is” to a high end games room for your children, it automatically becomes more expensive for the insurance company to replace, and as such, the price of your insurance could increase.
Weather
While we might not be able to control the weather, a change in weather patterns might have control over the amount we pay in insurance.
If you live in an area that, over time, has become more liable to thunderstorms or hurricanes, then you might notice that your home insurance rate might have increased. This is necessary because should such an event occur, the insurance company needs to be able to pay out the claims which could result from it.
Technology
More technological devices are being made for our homes every day. Many of these devices can warn us of destructive effects to our homes such as leaking of pipes or incoming storms, and as such, aid us in better preparing for them.
It was also found in research that leaking water, storm damage, theft, and floods were the biggest causes of home insurance claims. This means that the use of such technology could consequently lead to a lower amount of claims and cheaper rates in general. However, this is also a double-edged sword because due to the expensive prices of many of these advanced technologies, any damage to them might have to be paid for by your insurance company. This could lead to an increase in the amount you pay in home insurance.
There are several more reasons why your insurance rate may have increased, but if you still find that none of the reasons here fit, many insurance companies are always happy to explain any change in prices.