Home owners insurance policies have sky-rocketed in some states, while others are seeing their policy prices remain close to the same. All this has occurred amid record high profits in the insurance industry. Last year insurance companies netted $68-billion, while insurance policies cover less and cost more. In 2005 insurance companies profited a record $48-billion.
In many cases affordable home owners insurance is getting harder and harder to find, if not impossible.
State laws and governing panels are supposed to protect home owners, but many have not. Policies have been cancelled with little notice and the state agencies empowered to regulate the insurance industry in many cases are failing.
Insurance companies have one of the most powerful lobbyist groups in Washington D.C., and they have aligned themselves as one of the highest profitable businesses in the nation next to the oil industry. Critics charge the staggering profits are obscene.
Insiders in the insurance industry admit that companies do not want to write policies and chose to withdraw from states where they cannot net at least 40% profit annually.
Home owners insurance has become a full blow crisis in many states, particularly coastal regions like Louisiana, struck by Hurricane Katrina, and nearby states such as Mississippi, Alabama and highly populous Florida. Even California is affected by the crisis with higher earthquake insurance premiums, which have become too expensive for many to buy.
The challenge to find affordable home owners insurance has reached epidemic proportions not only along the Gulf Coast, but in the north east in New York, Rhode Island and New Jersey and is expected to spread to many other states.
However, there are several things consumers can do to get the best possible policy available at the cheapest price. One of the most common recommendations is to check the CLUE (Comprehensive Loss Underwriting Exchange) report on any home you are considering buying. CLUE reports contain the insurance claim history of properties and can help consumers judge the problems that may already exist with a home.
Flood and Earthquake Are Separate
Flood insurance and earthquake coverage are not covered by standard homeowners insurance policies. These two forms of insurance need to be purchased separately. The Federal Flood Management Agency provides information on its web site at www.floodsmart.gov
Earthquake insurance information may be obtained through insurance companies writing policies in earthquake prone areas and also from local insurance agents. Some are supported by state government programs.
Insurance for some homes is less expensive than others. If you buy a home close to a fire hydrant or in a community that has a full time professional fire department a policy will generally be less than in a community with a volunteer fire department.
Policies may also be less if your home has been constructed within the last 10 years. In some areas brick homes are less expensive to insure than wooden homes because they tend to be more wind resistant. In earthquake prone regions the opposite is the case. Wooden homes sustain earthquakes better and suffer less damage.
Making the right choices can save from 5% to 20% on your monthly premiums.
Home owners typically want insurance to cover any major purchases or additions to their homes, but not spend money on excessive coverage. It’s a good idea to ask insurance agents about coverage limits and to read the entire insurance policy to understand what you’re getting completely.
Protect Yourself First
One aspect of insurance coverage that you usually won’t get from agents is vitally important for consumers. If you buy insurance from a company representative directly instead of an insurance broker, the agent is working for the company in most states, and will report anything you ask him or her about directly back to their company such as a question on whether you should file a claim. Just asking a question of an agent at the wrong time could cost you a higher premium in the future in this case even if you select not to file a claim.
Independent insurance agents are generally working for you instead, but not always. Ask your agent who he or she is working for when you start your business arrangement and how that might effect things.
The National Association of Insurance Commissioners www.naic.org has lots of information to help choose an insurer, including a section on filing complaints. Most states provide information on typical rates charged by major insurers to provide a way for consumers to start the process of shopping for home owners insurance.
How To Guide on Home Owners Insurance
Check for Yourself
To check the financial stability of an insurance company you’re considering go to www.ambest.com and www.standardandpoors.com to do your home work.
Insurance Fact
Two-thirds of all U.S. homes are under insured. To get the best estimate of how much coverage you need ask a local contractor what it would cost to rebuild your home. If you don’t do that it’s suggested that you at least figure $150 a foot to rebuild an average home. But it’s always best to get a local contractor’s estimate.
Insurance is Required
When buying a home with a mortgage buyers are required to include home owners insurance in order to protect the mortgage lender, who are careful not to take on more risk than is financially reasonable.
In most cases lack of knowledge about home owners insurance policy options equates to paying more than necessary. Industry veterans urge home owners to shop around for not only the best rates, but for the best coverage. Complacency costs home owners millions of dollars annually.
Review the Policy
Remember to review the limits of your home owners insurance policy at least once a year to protect yourself, and your family.