Home insurance rates are increasing in Richmond, Virginia and throughout the country. There are several reasons for the increases, which I’ll describe, along with what to do to make sure your policy provides the coverage you need at an affordable rate.
Home insurance rates are increasing because claims have substantially increased in the last five years coupled with very low interest rates. Claims resulting from small water claims, fallen trees and dog bites to catastrophes such as Hurricane Sandy and tornadoes in the mid-west. You may be asking yourself what does a tornado in the mid-west have to do with my policy in Richmond? A lot!
The purpose of insurance is to pool together monies which are then used to pay for claims. Policyholders with the same company are pulling from the same pot of money regardless of where you live. Richmond has also experienced higher than usual claim activity resulting in fallen trees, roof replacements and water damage. In fact, Richmond has experience higher claims in the last ten years then Virginia Beach, which has a lot of people questioning the current rate structure.
Interest rates also play a big part when it comes to home insurance because insurance companies invest in fixed assets. When interest rates are low it puts a lot of pressure on insurance companies to produce an underwriting profit. When interest rates are high insurance companies will use the investment income to offset premium increases. (Some companies that is!)
What to do…
First, you want to make sure you have the coverage you need and you want to remove coverage you don’t need. Why pay for coverage on a shed when you live in a townhouse and don’t have shed! Once you determine exactly what you need you can then compare rates. Insurance companies are pricing for package policies (home and car insurance) so make sure you check both to get the biggest discount. I often see someone paying $500 a year for car insurance with company X and $800 a year for home insurance with company Y. When I price the two policies as a package the price is $1,000 total. The car insurance may be more then you are paying now but the overall package price is less.
Second, make sure you talk to an independent insurance agent. Independent insurance agents are not held to any one company and they can compare rates and also advise you what companies are good and which ones to stay away from.
Third, do NOT file small claims. If your home sustains minor damage get an estimate before filing a claim. If the repair estimate is $600 and you have a $500 deductible it may not make sense to file the claim.
For more information about home insurance or questions leave a comment or contact our office at (804) 320-2886.