Storms Likely to Raise Homeowners Insurance Rates in 2012
Posted on Tue, Jan 03, 2012
Weather related claims around the world have cost insurance companies billions in 2011. Even in Massachusetts, we’ve experienced our own series of destructive weather phenomena. The beginning of the year brought winter storm upon storm resulting in ice dams on our homes and traffic accidents on our roads. In the middle part of the year, tornadoes ripped through Massachusetts from Springfield to Worcester. Hurricane Irene blew in in late August causing widespread wind damage, flooding and lengthy power outages. Let’s not forget about the Halloween snowstorm dumping over a foot of snow on Central Massachusetts and leaving behind snapped trees and residents without power for days on end. 2011 was a rough year for Massachusetts residents and businesses as well as insurance companies.
Since the insurance carriers have had to pay out billions in claims, they are raising rates. Most property insurance companies, those providing homeowners and other building insurance, will be looking at rates hikes in 2012. Because the damages from 2011 affected such large areas, companies that lost money aren’t limited to a handful: they all got hit. Looking forward, the cost of reinsurance, the insurance that insurance companies buy, is already trending higher as the effect of limited supply and higher demand drive those prices up. Thus, homeowners and other property insurance rates should rise for just about every homeowner across the state. We believe the average increase will be between 5% and 10%.
Tips for keeping home insurance affordable
Where does all of this leave you as a homeowner? In many cases, a higher home insurance premium could be coming your way. This is especially true if your home is located in a coastal area that was hit by Irene. However, there are things that you can do to help keep your insurance rates down:
- Raise your deductible - If you’re willing to take a little more of the risk and share the pain of a loss, the insurance company will charge you less.
- Home/auto credits - Most carriers now offer up to a 30% savings when both auto and homeowners policies are written with one insurance company.
- Ask us to shop for you - Some companies are raising rates more than others, and it pays to have a look at the market every few years anyway.
Since every client’s needs, budget and risk tolerance are different, we’ll work with you to determine the best solution for your situation.
While premium increases aren’t good news, we feel that an educating our clients on both the good and bad news is important. Please contact us with any questions or concerns you may have about your insurance program.