Accept Homeowners Insurance Increase?

by Kevin on August 19, 2008

We recently got a notice in the mail from our homeowner’s insurance company informing us that they were increasing our coverage by 6%. The claim is that in the past year the cost to rebuild our house has increased by that much, thus the coverage is going up.

However, even though our coverage is only going up 6%, our rate is increasing 13%. Funny how that works.

I am not well versed in homeowner’s insurance. I definitely don’t want to be undercovered. Of course, I don’t want to be overpaying for coverage either. I can let them know not to increase the coverage, or increase it to a different amount.

What should I do?

Edit: For some reason when I posted this, comments were blocked. I’ve gotten that fixed. Sorry about that…

{ 6 comments }

Russ August 19, 2008 at 4:34 pm

Kevin,

A couple of thoughts:
– use this as an opportunity to comparison shop with other, reputable insurers
– check your policy deductibles. i often find people have their deductibles too low which increases your premiums. since homeowners insurance is there in case of emergency, you might consider moving your deductible up to lower your policy premiums
– you definitely want the coverage increase, but it’s the premium increase that needs to be considered – perhaps with one or both of the above, you can get it somewhere that you’re comfortable

Good luck with it

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Rich August 19, 2008 at 7:42 pm

How can it be 6% when it goes up 13%?

Somethings a little fishy here, isn’t it?

Though, you knew an insurance hike was gonna come sooner or later- what did you get extra for that I wonder?

My Dollar Plan August 19, 2008 at 8:34 pm

The coverage went up 6%, but the premium was probably partially due to that and partially due to base rate increases.

Insurers often increase everyone’s Coverage A (your total insured amount) the same amount if they don’t have all your information on file. You can call your agent and ask him to calculate the cost to rebuild. He should have a calculator that he can plug in all your information. It may or may not have a different number, but it’s worth a call.

In addition, be sure that you are not insuring your land, but only your house. In the event of a fire, you would still have your land.

Also, like Russ mentioned, look into raising your deductible and shop around.

Bob October 7, 2009 at 10:45 am

I have a similar issue. My coverage is only going up 3.7%, but premium is going up 15.5%. I have State Farm. Since Oct 2001, my coverage has gone up 42.5%, while the deductible has gone up 137%!!! I live in central Pennsylvania (so there’s no hurricane fears – though I think I’m paying for Florida and Louisianna troubles) and have not made any claims since building this house in Oct 2001.

DKW February 3, 2010 at 5:59 am

Our home insurance went from 349 to 618 which I would consider almost doubled. The fact remains, the insurance company tells me it cost more to rebuild my house. Which is not true, as I can go down the street and find same house newly built for less than I paid for mine new which by the way is only 2 yrs old. Makes no sense to raise the amount that much. I have checked around and so far all have come up with the same increased price. What gives? Are there no controls on this. Now my mortgage payment is really getting harder to make. On a retired fixed income this is just not good.

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