Why Do My Home Insurance Rates Go Up Every Year?
Home insurance rates fluctuate depending on several factors, some of which differ year to year while some occur seemingly at random. Keeping track of what is influencing your rates and how can help you better understand your policy and thus save money on home insurance coverage.
Changes in Your Insurer
Your insurance provider may change year to year with their processes and management, which can influence how much you pay for home insurance. If your home insurance provider switches processes, you may see a difference in your prices. Always connect with your insurance agent if you have questions about changes in your coverage or prices.
Value of Your Home
As your home’s value goes up or down, you may see a related difference in your home insurance rates. Home insurance is calculated based on your home’s total replacement cost value. If that value changes, so can the amount of insurance you need along with how much you pay for coverage.
This also applies if you make upgrades to the home. If the value of your home changes due to upgrades or updates, notify your insurance provider so that your policy can be adjusted as needed.
Changes in Your Area
Sometimes there can be changes in your location can influence your home insurance rates such as the history of natural disasters, storms, and crime rate. If your crime rate goes up one year, for example, your home insurance rates may also rise to compensate the additional risk.
Claims on Your Policy
Additional claims on your own policy can also have an affect on your home insurance policy, although these won’t necessarily wait for the new year to drop onto your policy. Filing a claim on any aspect of your home insurance (liability, dwelling, personal belongings) can raise your rates.
Switching Insurance Providers
When the new year comes around, many homeowners review their policy and compare quotes with other insurers. This can help you understand whether or not you are paying too much for your coverage. Of course, switching insurers can mean that your insurance rates change for better or for worse. If you switched insurers during the year, you are still subject to see changes when the new year rolls around.
Claims Leaving Your Policy
In some cases, your insurance rates will drop as a result of a claim leaving your policy. On average, a home insurance claim may remain on your record from five to seven years. Once you reach the end of this time period, you may see a related drop in your home insurance rates.