No one likes the nasty surprise of opening their renewal insurance policy and finding the rate has gone up a few hundred dollars. If you find your insurance premium has changed from the premium you paid last year here are a few things to consider. Check to see if the amount of insurance is the same. Is your house is insured for the same amount as it was a year ago? Insurance companies use what they call an “inflation guard” for many replacement policies. This means they raise the amount of insurance on your house to cover inflation. For instance if your house was insured for $100,000 last year the company may raise it to $110,000 to keep up with rising prices. Since the cost of labor and materials to rebuild the house keep rising, the company wants your house to be insured for its true replacement cost. The market value of the house may be lower than the amount of insurance listed on the policy, but the insurance company has to pay to rebuild the house with like kind and quality of materials in the event of a loss. The cost to rebuild the house may be more than its market value. If the house burns, the company is obligated to pay you the amount of insurance stated on the policy. Not all policies have the inflation guard feature. Insurance rates are going up! For several years insurance costs have remained stable. This is changing. Unfortunately, rates on home and autos are starting to go up again. Just as we are beginning to see the effects of inflation in many other areas of our economy so we are seeing it in the costs of protecting our property and assets.
What can you do about raising insurance rates?
- Make sure you are getting all your discounts. Often discounts offered on multiple policies can off set the rise in rates. Ask your agent for a quote on your home, autos, and life with the same company. Many times you will more than off set the rate increase.
- Get a policy review. You may be paying for things you don’t need if you have sold property or no longer use property you have insured. Your agent may be able to offer you a policy with a higher deductible that can decrease the premium.
Ask your agent to review your policy to be sure you know what protection you are buying. Before you shop your policies make sure you understand what the policy covers. Many times people think they are getting a great bargain when they get a quote that is much lower than they are already paying. Be careful here. We all want to save money, but sometimes saving a few dollars on insurance premium can cost you a bundle when a loss happens. Here are a few areas where you need to be very careful when looking for insurance.
- If you own acres and/or livestock you need to make sure you have the right policy to protect you in the event of a lawsuit involving your farm acreage or livestock.
- If you own livestock, and barns, farm equipment, hay, or farm tools these items must be listed on the policy to have protection. A standard home owners policy cannot insure these items. You need a policy especially designed to protect farms.
- When you get a quote for a policy make sure you are being offered a policy that does not have less protection than you already have. If your house qualifies for replacement cost, make sure the quote says replacement cost. The cheaper premium on a policy that does not offer replacement cost may not be a good bargain because in the event of a loss the insurance company may deduct depreciation from your loss in addition to the deductible. There are a number of things the cheaper policy may not cover such as water discharge from plumbing or sewer, or theft.
Insurance is complicated and we are here to help you understand it. At Elzey Insurance, we take particular care in helping you get the protection you need at the best price possible without sacrificing all important protection. Whether you live on a large farm or in a city, we offer policies designed to protect your property. We insure your property with the best protection available on the market at competitive rates.
Call Elzey Insurance today. We are ready to help you! 1-866-660-6800
