When you receive your Home Insurance renewal, it can be disappointing to see that your premium is increasing. However, it’s important to understand why that may be, as it could be in your best interest. To help explain why this may occur, there are six important factors to remember when you’re reviewing your insurance as each factor could greatly influence what you pay and how much you’re insured for.
When you renovate your home, it’s crucial that you talk to your trusted advisor. Completing renovations and not notifying your Home Insurance provider could leave you at risk for being underinsured. This is because often, when you complete a renovation, you are usually increasing the value of your home. Meaning, if you increase how much your home is worth and if you suffer a claim prior to notifying your insurance provider of the change, you will only be provided with enough coverage for the value of your home pre-renovation. Leaving you at risk for being financially responsible if you would like to repair the damage to the value which it was worth before the claim.
Your Claims History
Another factor that can increase your Home Insurance premium is your claims history, or any previously submitted claims. While this reason is well known among homeowners, it’s always good to reiterate how your past claims could affect your premium. The most common reason why your claims history could affect your policy is because when homeowners are claims-free, they often have a discount which rewards them for this. However, that discount is lost when a claim is filed, meaning, the discount is no longer applicable. Immediately increasing a premium if the discount is no longer valid.
High-End Features In Modern Homes
As more modern homes are built, they often include high-end features or newer construction materials. While these features can help the home sell faster as they appeal more to potential homeowners, they can also be costly to repair or replace in the event of a claim. Meaning, to be able to cover these costly features through an insurance policy, many companies must slightly increase premiums. So even if two homes are very similar, the features of the home will cause a significant difference in their premiums as one home may require more funds to repair features or replace damage.
Similar to high-end home features that are increasing premiums, finished basements can also cause rates to increase. This is because when a basement is finished, it puts the home at greater risk for a claim in comparison to a home where the basement is unfinished and unused. This is simply because that space will now automatically cost more to repair if there is a flood, or other damage, in comparison to an unfinished space.
Eco-Friendly Is Not Always Budget Friendly
As previously mentioned, modern homes that have high-end features, often require a higher coverage amount to be able to compensate for any claims. This is the same for eco-friendly home features. While they could help the environment and help you save month-to-month on your bills, the technology and materials they consist of are often costly to not only purchase and replace, but repair.
Where you live could as well affect your insurance premium and cause it to increase. This specifically has to do with aging municipal infrastructure and trends within your community. In regards to aging municipal infrastructure, it has been noted that outdated or older municipal infrastructure can cause sewer backups to happen more frequently. Meaning more homes could have claims related to sewer backup damage. Similarly, changing community trends could also change your premium over time. This specifically refers to how some communities can have crime rates increase or decrease, or some communities could become more at risk for certain weather-related events such as floods or forest fires.
If you noticed a change in your Homeowners Insurance premium, or if you have a question for how you could lower it in the future, contact your Cambridge Insurance broker! We’ll be happy to do what we can to lower your premium while providing you with the best coverage possible.