Home insurance going up every year...

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Topic Author
stw
Posts: 30
Joined: Wed Jul 05, 2017 10:29 am

Home insurance going up every year...

Post by stw » Tue Jan 22, 2019 8:26 pm

We've been in our current house for about 10 years - bought for about $260k. Our first insurance premium was around $1200 per year. For the first few years, we went with an independent agent who quoted from several companies. After a few years, the premium went above $2500. I shopped around and landed on Amica. Great rates, but by year 3 with them, they shot up to almost $4000! A friend suggested Ameriprise last year. We got solid coverage for just over $2000. Then year two, they jacked it to over $2400. In all of this time, we haven't made one claim.

Are there a few insurance companies that Bogleheads gravitate to?

Alan S.
Posts: 8886
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Home insurance going up every year...

Post by Alan S. » Tue Jan 22, 2019 9:45 pm

Most all companies constantly raise rates, the only difference being larger increases less frequently or smaller increases just about every renewal. What further aggravates the increases is switching to the lowest cost carrier.

The lower the premium, generally the closer you are to larger increases because the company is not charging as much as other carriers when you selected them. That often equates to poor underwriting results and the need for rate increases sooner rather than later, and larger rather than smaller.

The only solution is to change quite often, and that is a lot of work with new underwriting of your application as well. I know they all have your claims record but not sure if they also know your history of companies. If they do know that and see that you change every year or two, perhaps they offer you a non competitive quote.

pshonore
Posts: 6669
Joined: Sun Jun 28, 2009 2:21 pm

Re: Home insurance going up every year...

Post by pshonore » Wed Jan 23, 2019 10:22 am

Alan S. wrote:
Tue Jan 22, 2019 9:45 pm
Most all companies constantly raise rates, the only difference being larger increases less frequently or smaller increases just about every renewal. What further aggravates the increases is switching to the lowest cost carrier.

The lower the premium, generally the closer you are to larger increases because the company is not charging as much as other carriers when you selected them. That often equates to poor underwriting results and the need for rate increases sooner rather than later, and larger rather than smaller.

The only solution is to change quite often, and that is a lot of work with new underwriting of your application as well. I know they all have your claims record but not sure if they also know your history of companies. If they do know that and see that you change every year or two, perhaps they offer you a non competitive quote.
If they have your claim record I'd be very surprised if they didn't know who paid the claim as well. No claims of course means no history though.

User avatar
jeffyscott
Posts: 8409
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: Home insurance going up every year...

Post by jeffyscott » Wed Jan 23, 2019 10:44 am

Similar experience, though with much lower rates, went from American Family to Amica to independent agent over about 20 years in this house.

Most recent change from Amica to independent changed a 25% increase for auto, home, umbrella into a decrease of similar magnitude. Amica was going from about $1100 to about $1400 and instead we got all for about $900, with deductible reduced from $5000 to $2000 on homeowner's.

We had one claim for hail damage about 10 years ago, that type of claim had no effect on rates, as I understand it.
Time is your friend; impulse is your enemy. - John C. Bogle

Thegame14
Posts: 1349
Joined: Mon May 07, 2018 11:53 am

Re: Home insurance going up every year...

Post by Thegame14 » Wed Jan 23, 2019 10:46 am

my homeowners started at $1,200 a year switched to NJM and now pay $804 a year, plus we get a dividend check at the end of the year. And that includes $90 for insuring our wedding/engagement rings, so without that it would be $714 a year

Rupert
Posts: 4122
Joined: Fri Aug 17, 2012 12:01 pm

Re: Home insurance going up every year...

Post by Rupert » Wed Jan 23, 2019 10:50 am

It doesn't really matter what company you go with. They all raise rates, especially if you live in a region affected by natural disasters (which seems to be just about every region these days). The only solution is to change companies frequently.

User avatar
Toons
Posts: 13424
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Home insurance going up every year...

Post by Toons » Wed Jan 23, 2019 10:52 am

I have stuck with Geico
They underwrite Travelers
:wink:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

User avatar
RickBoglehead
Posts: 5581
Joined: Wed Feb 14, 2018 9:10 am
Location: In a house

Re: Home insurance going up every year...

Post by RickBoglehead » Wed Jan 23, 2019 10:54 am

Watch the news. These disasters, like the massive California fires that destroyed entire towns, the flooding last year from the hurricanes, this is being paid for. Everyone's rates in every state are going up, and will continue to go up. We all pay for this eventually.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

michaeljc70
Posts: 6005
Joined: Thu Oct 15, 2015 3:53 pm

Re: Home insurance going up every year...

Post by michaeljc70 » Wed Jan 23, 2019 12:04 pm

I'm not sure where you are located, but $4k for home insurance on a house that isn't that expensive is crazy. Exceptions would be if you live in a hurricane or wildfire area or something like that.

I didn't see this mentioned, but most companies use tricks to get you to switch to them. They call it a new customer discount or something like that. It drops off after some period of time.

I've had pretty good luck with Progressive. It has gone up, but not big increases over the last 5 years. As others said, shop around. If you have had recent claims though, you are probably stuck.

Oh, and throwing out one other thing. What about your credit? Most insurance companies use your credit in determining rates. I believe most initially, but some might on an ongoing basis.

chessknt
Posts: 206
Joined: Wed Jul 13, 2016 3:15 am

Re: Home insurance going up every year...

Post by chessknt » Wed Jan 23, 2019 12:30 pm

I change all my insurance every year or two for this reason. Started using an independent insurance agent and it made the process a lot less painful.

2015
Posts: 2906
Joined: Mon Feb 10, 2014 2:32 pm

Re: Home insurance going up every year...

Post by 2015 » Wed Jan 23, 2019 12:56 pm

chessknt wrote:
Wed Jan 23, 2019 12:30 pm
I change all my insurance every year or two for this reason. Started using an independent insurance agent and it made the process a lot less painful.
Doesn't your insurance agent charge a fee for shopping rates for you?

michaeljc70
Posts: 6005
Joined: Thu Oct 15, 2015 3:53 pm

Re: Home insurance going up every year...

Post by michaeljc70 » Wed Jan 23, 2019 1:28 pm

chessknt wrote:
Wed Jan 23, 2019 12:30 pm
I change all my insurance every year or two for this reason. Started using an independent insurance agent and it made the process a lot less painful.
I've always wondered, what keeps them from presenting only the policies with the best commissions? Also, they may only quote those companies that pay better commissions. Clearly they aren't working for free.

chessknt
Posts: 206
Joined: Wed Jul 13, 2016 3:15 am

Re: Home insurance going up every year...

Post by chessknt » Wed Jan 23, 2019 1:30 pm

Not that I saw. The company might have rolled it in to the premiums but they were lower than I was paying and better than what I found online. If rates go up I'll have them look again an dif they won't will just fi d another agent or do it myself.

bberris
Posts: 1332
Joined: Sun Feb 20, 2011 9:44 am

Re: Home insurance going up every year...

Post by bberris » Wed Jan 23, 2019 1:45 pm

michaeljc70 wrote:
Wed Jan 23, 2019 1:28 pm
chessknt wrote:
Wed Jan 23, 2019 12:30 pm
I change all my insurance every year or two for this reason. Started using an independent insurance agent and it made the process a lot less painful.
I've always wondered, what keeps them from presenting only the policies with the best commissions? Also, they may only quote those companies that pay better commissions. Clearly they aren't working for free.
Commissions may be regulated by state. Also fear of losing business; if you are shopping insurance, you might be shopping agents.

Andyrunner
Posts: 758
Joined: Thu May 03, 2012 9:14 am

Re: Home insurance going up every year...

Post by Andyrunner » Wed Jan 23, 2019 1:50 pm

Insurance companies bank on people not shopping around.

I have a independent agent who will shop around every few years for me. Of course I sometimes have to remind him to see what is out there.

User avatar
flossy21
Posts: 500
Joined: Sun May 27, 2007 2:04 pm

Re: Home insurance going up every year...

Post by flossy21 » Wed Jan 23, 2019 1:52 pm

I've had similar experience to you but my premiums aren't near that high on a higher insurance amount. I push my deductibles to the max. I figure the only claim I'm going to make is if the roof blows off or the place burns down so I can go out of pocket for $5k if that happens.

I had Progressive for my Homeowners up until recently. I had a local broker do some quotes for me and switched to Main Street America Group. I kept my autos and umbrella at Progressive and, so far, haven't took a hit due to the unbundling.

Rupert
Posts: 4122
Joined: Fri Aug 17, 2012 12:01 pm

Re: Home insurance going up every year...

Post by Rupert » Wed Jan 23, 2019 1:55 pm

michaeljc70 wrote:
Wed Jan 23, 2019 1:28 pm
chessknt wrote:
Wed Jan 23, 2019 12:30 pm
I change all my insurance every year or two for this reason. Started using an independent insurance agent and it made the process a lot less painful.
I've always wondered, what keeps them from presenting only the policies with the best commissions? Also, they may only quote those companies that pay better commissions. Clearly they aren't working for free.
It's important to distinguish agents from brokers in this context. All agents have relationships with certain insurers (1 insurer in the case of captive agents, multiple insurers in the case of independent agents). They are only going to get quotes from the companies they represent. They are paid by commission, which is a percentage of the face value of the policy. The percentage varies depending on insurer and type of policy, but typically ranges from 10-20%. Brokers, in contrast, represent the insurance purchaser and aren't paid a commission by the insurance company. They charge the insured a broker's fee. In some states, insurance salesmen can be both agents and brokers. When getting quotes, you should ask the salesman if he/she is acting as an agent or broker and about how he/she will be compensated.
Last edited by Rupert on Wed Jan 23, 2019 2:02 pm, edited 1 time in total.

neilpilot
Posts: 2905
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Home insurance going up every year...

Post by neilpilot » Wed Jan 23, 2019 2:00 pm

Toons wrote:
Wed Jan 23, 2019 10:52 am
I have stuck with Geico
They underwrite Travelers
:wink:
Actually, you have it backwards. :wink: :wink:

GEICO sells homeowner insurance from various underwriters. GEICO does not underwrite homeowners insurance.

In your case, Travelers is the underwriter. GEICO is the agent and/or seller of the policy.

Also, the underwriters that GEICO uses vary by location. Where I live, GEICO doesn't offer Travelers. The homeowner quotes that I've gotten from GEICO, when I've tried a couple of times, have consistently been high and so I've gone to other companies to insure my home.

I continue to use GEICO for my auto and umbrella coverage,

User avatar
Toons
Posts: 13424
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Home insurance going up every year...

Post by Toons » Thu Jan 24, 2019 8:20 am

neilpilot wrote:
Wed Jan 23, 2019 2:00 pm
Toons wrote:
Wed Jan 23, 2019 10:52 am
I have stuck with Geico
They underwrite Travelers
:wink:
Actually, you have it backwards. :wink: :wink:

GEICO sells homeowner insurance from various underwriters. GEICO does not underwrite homeowners insurance.

In your case, Travelers is the underwriter. GEICO is the agent and/or seller of the policy.

Also, the underwriters that GEICO uses vary by location. Where I live, GEICO doesn't offer Travelers. The homeowner quotes that I've gotten from GEICO, when I've tried a couple of times, have consistently been high and so I've gone to other companies to insure my home.

I continue to use GEICO for my auto and umbrella coverage,

Thank You Neil
"Senior"Moment :sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

User avatar
ReformedSpender
Posts: 407
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: Home insurance going up every year...

Post by ReformedSpender » Thu Jan 24, 2019 8:47 am

Similar situation here

Long gone are the days of customer loyalty and sustainable rates the longer you stay with a company. We've averaged an increase of 10% each year whether we bundled Auto/Life or didn't or called to renegotiate. Bottom line, you are forced to shop around these days. Unless you are mortgage free and can justify dropping home insurance to bare minimums or none at all, insurance companies know you are at their mercy.
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

User avatar
Smorgasbord
Posts: 422
Joined: Fri Jun 10, 2016 8:12 pm

Re: Home insurance going up every year...

Post by Smorgasbord » Thu Jan 24, 2019 9:12 am

Indeed, insurance companies are becoming like the cable companies where costumers are incentivized to change providers every few years. I should really set aside one Saturday every two years specifically for switching various service providers.

User avatar
Nate79
Posts: 5290
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Home insurance going up every year...

Post by Nate79 » Thu Jan 24, 2019 9:25 am

I would find another independent agent to shop around to see if they can beat your current rates.

jminv
Posts: 1014
Joined: Tue Jan 02, 2018 10:58 pm

Re: Home insurance going up every year...

Post by jminv » Thu Jan 24, 2019 9:31 am

Live overseas, but still have a car and home in the states to insure. Home is occupied by family member. On auto, my rates have actually continually declined by small amounts. This is with progressive. I do comparison quote shopping annually (+independent agent) but can never find a cheaper option other than geico, which I am not willing to use and the difference is marginal, 3-4% (had them before, they do the teaser rates then jack up prices, and in meantime would have lost loyalty benefits progressive provides).

On home, I switch carriers annually. Although I switch annually, the long term trend on pricing for the home I am insuring continually decreases as long as I comparison shop. I also check independent agents to be sure I'm finding the best deal. It is very strange, home prices and the insured amount are steadily increasing. I believe that competition for the business, at least in the area I am in, has been strong. It's the same thing with an existing policy, though, every year, low promo price that goes up 10% or more at renewal. Latest was a 20% increase attempt. Switched to myhippo this time, actual insurer is a smaller but well rated company. Price was extremely low, saved a bundle (30% off what I paid for last year's identical coverage).

katrid11
Posts: 18
Joined: Wed Oct 31, 2018 10:11 am

Re: Home insurance going up every year...

Post by katrid11 » Thu Jan 24, 2019 9:33 am

We have used State Farm the last 7 years. I bundled my 2 cars, home insurance, jewelry insurance together. We pay $910 a year for home owners for our new house. Our previous house was $784. The new one is bigger 2700sf vs 1800sf. Overall our rates have stayed the same or decreased.

We do shop around every 1-2 years anyway. I have yet to beat our rates but you never know. I have had good experience with Amica in the past but they are more expensive for us right now.

If you live in a high disaster area or one prone to them then maybe that's why your insurance is so high?

I know high premiums where I am are triggered by having a pool or trampoline, some dog breeds, proximity to the coast, and of course the finishes in your house.

DaftInvestor
Posts: 4842
Joined: Wed Feb 19, 2014 10:11 am

Re: Home insurance going up every year...

Post by DaftInvestor » Thu Jan 24, 2019 10:13 am

I would contact two independent agents and let them give you their best prices.
You can also get quotes from some of the bigger firms direct before comparing them all.
Last time I did this - Amica was by far the most expensive option so I would definitely dump them. They are known for good customer service but charge a large amount over others for it.
Also - many will want your car under them as well for an additional discount. I found that a lot of the large companies that do this charge you 30% more than other companies to begin with then try to make you feel good about getting a 10 to 15% multi-product discount.

User avatar
jeffyscott
Posts: 8409
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: Home insurance going up every year...

Post by jeffyscott » Thu Jan 24, 2019 10:38 am

DaftInvestor wrote:
Thu Jan 24, 2019 10:13 am
Last time I did this - Amica was by far the most expensive option so I would definitely dump them. They are known for good customer service but charge a large amount over others for it.
I don't think anyone should assume that is the case for all. While we switched from Amica, after shopping last summer, they were lower on homeowner's (as well as for all our insurance combined) than Allstate or Progressive. After the independent agent, our next lowest was Ameriprise via Costco, which the OP says has jacked their rates up. Others have said Progressive gave them the best deal. When we signed up with Amica their rates for us were low. So the only thing that seems clear is that results will vary.
Time is your friend; impulse is your enemy. - John C. Bogle

UALflyer
Posts: 524
Joined: Thu Jan 17, 2013 10:42 am

Re: Home insurance going up every year...

Post by UALflyer » Thu Jan 24, 2019 11:53 am

Toons wrote:
Wed Jan 23, 2019 10:52 am
I have stuck with Geico
They underwrite Travelers
:wink:
Geico doesn't "underwrite" Travelers or any other company. Instead, Geico has an insurance agency, which acts just like any other independent insurance agency, and sells homeowner's insurance provided by non-affiliated thirty party companies, such as Travelers, etc...

If you have Geico's auto policy and then use their insurance agency to obtain a homeowner's policy (Geico does not have its own homeowner's insurance arm), they effectively rebate a small portion of their commission to you in the form of a "multi-policy discount" on the auto side, but it's significantly smaller than the multi-policy discounts that you'd obtain through the carriers that have both auto and homeowner's sides. If the overall premiums are competitive and your are comfortable with Geico and the homeowner's insurance carrier, there's no problem. You just have to understand that on the homeowner's side, dealing with Geico isn't any different than dealing with an independent insurance agent.
chessknt wrote:
Wed Jan 23, 2019 12:30 pm
I change all my insurance every year or two for this reason. Started using an independent insurance agent and it made the process a lot less painful.
Just keep in mind that some insurance companies only use captive agents, while others only use independent agents. Further, no independent agent has access to every insurance company that is available through independent agencies. If this wasn't enough, sometimes the premiums also depend on the way that the agent handles the quote (not just the coverages themselves). Some insurance companies also use certain models where the same policy can be priced differently depending on the way that you obtained it, meaning that, for instance, a large high volume agency may have access to a lower price than that offered by a small independent agency.

Basically, if you are only getting insurance quotes from one independent agent, then you're not shopping a huge number of insurance companies.

MikeG62
Posts: 2297
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Home insurance going up every year...

Post by MikeG62 » Thu Jan 24, 2019 12:38 pm

Alan S. wrote:
Tue Jan 22, 2019 9:45 pm
Most all companies constantly raise rates, the only difference being larger increases less frequently or smaller increases just about every renewal. What further aggravates the increases is switching to the lowest cost carrier.

The lower the premium, generally the closer you are to larger increases because the company is not charging as much as other carriers when you selected them. That often equates to poor underwriting results and the need for rate increases sooner rather than later, and larger rather than smaller.
I agree with this. Lowest cost carrier probably offering teaser rates and eventually will need to get you up to where you ought to be.

I switched to NJM three years ago. Other than a sizable increase in the 2nd year as they convinced me I need to increase the replacement cost coverage on my home and contents, they have been solid - rate actually declined from the 2nd to the 3rd year. It's still a lot of money (~$2,100 per year), but that appears to be the going rate.

Prior to switching, I had Travelers and they were pretty good about the increases on my homeowners from year to year. Reason I switched is I also had auto insurance with Travelers and when my youngest daughter rolled onto our policy the increase was quite large. So I shopped around and discovered that NJM was a bit lower on the combined (auto and homeowners) premium. Plus, I was going to retire and lose the window of opportunity to enroll in NJM in another year or so, so I decided it was time to make the switch. I had gotten Travelers through AAA (if you are a member, they can quote you coverage from multiple carriers at one time - at least as I recall).

Good luck. Agree that it is frustrating.
Real Knowledge Comes Only From Experience

pdavi21
Posts: 1296
Joined: Sat Jan 30, 2016 4:04 pm

Re: Home insurance going up every year...

Post by pdavi21 » Thu Jan 24, 2019 12:42 pm

I go without for reasons:
1. Able to because house is paid off.
2. Financially ready for a total loss (or liability claim).
3. House is relatively cheap.
4. I am more careful than the average person.
5. They always have deducribles and play games to not pay out.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

neilpilot
Posts: 2905
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

Re: Home insurance going up every year...

Post by neilpilot » Thu Jan 24, 2019 12:46 pm

pdavi21 wrote:
Thu Jan 24, 2019 12:42 pm
I go without for reasons:
1. Able to because house is paid off.
2. Financially ready for a total loss (or liability claim).
3. House is relatively cheap.
4. I am more careful than the average person.
5. They always have deducribles and play games to not pay out.
The average person believes that they are more careful than the average person

User avatar
Artsdoctor
Posts: 4186
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: Home insurance going up every year...

Post by Artsdoctor » Thu Jan 24, 2019 12:47 pm

Your rate seems extraordinarily high, although there are so many factors affecting insurance rates that it's impossible to say if it's fair or not. Our homeowner's insurance rate has not really increased much over many, many years, but we have everything with one carrier (State Farm) so the discounts are substantial. When you shop around, see if there are discounts for you if you bundle (homeowner's, umbrella, cars, etc.). You'd also want to check out the obvious (flood area, etc.).

pdavi21
Posts: 1296
Joined: Sat Jan 30, 2016 4:04 pm

Re: Home insurance going up every year...

Post by pdavi21 » Thu Jan 24, 2019 12:59 pm

neilpilot wrote:
Thu Jan 24, 2019 12:46 pm
pdavi21 wrote:
Thu Jan 24, 2019 12:42 pm
I go without for reasons:
1. Able to because house is paid off.
2. Financially ready for a total loss (or liability claim).
3. House is relatively cheap.
4. I am more careful than the average person.
5. They always have deducribles and play games to not pay out.
The average person believes that they are more careful than the average person
That's not much of a stretch because they are average careful if the are the average person. Which means they are statistically likely to lose money on insurance.

EDIT: Anyways, I think I am way above average, which makes me, at least, above average 8-) .
Last edited by pdavi21 on Thu Jan 24, 2019 1:07 pm, edited 1 time in total.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

UALflyer
Posts: 524
Joined: Thu Jan 17, 2013 10:42 am

Re: Home insurance going up every year...

Post by UALflyer » Thu Jan 24, 2019 12:59 pm

MikeG62 wrote:
Thu Jan 24, 2019 12:38 pm
Alan S. wrote:
Tue Jan 22, 2019 9:45 pm
Most all companies constantly raise rates, the only difference being larger increases less frequently or smaller increases just about every renewal. What further aggravates the increases is switching to the lowest cost carrier.

The lower the premium, generally the closer you are to larger increases because the company is not charging as much as other carriers when you selected them. That often equates to poor underwriting results and the need for rate increases sooner rather than later, and larger rather than smaller.
I agree with this. Lowest cost carrier probably offering teaser rates and eventually will need to get you up to where you ought to be.
The fact that a policy costs less doesn't actually tell you anything about the likelihood of future increases. Sure, some carriers may find themselves inadvertently underpricing their policies, which then causes them to jack up the premiums, but the fact that your particular policy happens to be cheaper with them does not actually tell you that the carrier is inadvertently underpricing it.

Carriers are constantly slicing and dicing risk, and also have very different experience with different types of customers. Hence, the reason that it is common for people to obtain better coverage from a better carrier for less than they were paying before, as the new carrier just considers them to represent a lower actuarial risk.

I very much agree that people should be looking not just at their policy premiums, but also their policy coverage and their carrier. If those check out though, I wouldn't hesitate to switch policies to save money and wouldn't make any assumptions about the reasons that the premiums are lower.

MikeG62
Posts: 2297
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: Home insurance going up every year...

Post by MikeG62 » Thu Jan 24, 2019 1:17 pm

UALflyer wrote:
Thu Jan 24, 2019 12:59 pm
MikeG62 wrote:
Thu Jan 24, 2019 12:38 pm
Alan S. wrote:
Tue Jan 22, 2019 9:45 pm
Most all companies constantly raise rates, the only difference being larger increases less frequently or smaller increases just about every renewal. What further aggravates the increases is switching to the lowest cost carrier.

The lower the premium, generally the closer you are to larger increases because the company is not charging as much as other carriers when you selected them. That often equates to poor underwriting results and the need for rate increases sooner rather than later, and larger rather than smaller.
I agree with this. Lowest cost carrier probably offering teaser rates and eventually will need to get you up to where you ought to be.
The fact that a policy costs less doesn't actually tell you anything about the likelihood of future increases. Sure, some carriers may find themselves inadvertently underpricing their policies, which then causes them to jack up the premiums, but the fact that your particular policy happens to be cheaper with them does not actually tell you that the carrier is inadvertently underpricing it.

Carriers are constantly slicing and dicing risk, and also have very different experience with different types of customers. Hence, the reason that it is common for people to obtain better coverage from a better carrier for less than they were paying before, as the new carrier just considers them to represent a lower actuarial risk.

I very much agree that people should be looking not just at their policy premiums, but also their policy coverage and their carrier. If those check out though, I wouldn't hesitate to switch policies to save money and wouldn't make any assumptions about the reasons that the premiums are lower.
You are right it doesn't necessarily. However, there are enough examples of folks on this forum who experienced sizable increases after switching for a much lower rate to at least wonder if there is a correlation there. Insurers should also be considered based upon how easy they are to do business with and their approach to handling claims and making payments under the policy. To me that is worth paying a bit more for.

A quick story. My daughter was in an auto accident last month (thankfully she is ok). Car suffered extensive damage. When we went to clear her belongings from her car at the salvage yard (place where the car was towed), the owner of the yard asked who our auto insurer was. When I told him NJM, he replied then you guys are fine - they will total this car. He said, other insurers would fight us on trying to repair it.

As my father has often said, "sometimes cheap you pay and cheap you get".
Real Knowledge Comes Only From Experience

UALflyer
Posts: 524
Joined: Thu Jan 17, 2013 10:42 am

Re: Home insurance going up every year...

Post by UALflyer » Thu Jan 24, 2019 2:24 pm

MikeG62 wrote:
Thu Jan 24, 2019 1:17 pm
You are right it doesn't necessarily. However, there are enough examples of folks on this forum who experienced sizable increases after switching for a much lower rate to at least wonder if there is a correlation there. Insurers should also be considered based upon how easy they are to do business with and their approach to handling claims and making payments under the policy. To me that is worth paying a bit more for.

A quick story. My daughter was in an auto accident last month (thankfully she is ok). Car suffered extensive damage. When we went to clear her belongings from her car at the salvage yard (place where the car was towed), the owner of the yard asked who our auto insurer was. When I told him NJM, he replied then you guys are fine - they will total this car. He said, other insurers would fight us on trying to repair it.

As my father has often said, "sometimes cheap you pay and cheap you get".
I wholeheartedly agree with everything that you've said, but the problem is that the premium levels tell you absolutely nothing about the quality of your insurer. A ton of people out there have been surprised to find out that a better insurer and a better policy will often be cheaper for them.

xerxes101
Posts: 120
Joined: Sat Oct 14, 2017 11:25 am

Re: Home insurance going up every year...

Post by xerxes101 » Fri Jan 25, 2019 6:03 am

Toons wrote:
Thu Jan 24, 2019 8:20 am
neilpilot wrote:
Wed Jan 23, 2019 2:00 pm
Toons wrote:
Wed Jan 23, 2019 10:52 am
I have stuck with Geico
They underwrite Travelers
:wink:
Actually, you have it backwards. :wink: :wink:

GEICO sells homeowner insurance from various underwriters. GEICO does not underwrite homeowners insurance.

In your case, Travelers is the underwriter. GEICO is the agent and/or seller of the policy.

Also, the underwriters that GEICO uses vary by location. Where I live, GEICO doesn't offer Travelers. The homeowner quotes that I've gotten from GEICO, when I've tried a couple of times, have consistently been high and so I've gone to other companies to insure my home.

I continue to use GEICO for my auto and umbrella coverage,

Thank You Neil
"Senior"Moment :sharebeer
This is interesting, I am with Geico and Travelers too right now. The first year I was with Geico, they matched me up with Liberty Mutual and the rate was good. Come second year when LM tried to raise my rate significantly, I called Geico, and I was surprised that Geico said that that they understood and they matched me up with Travelers instead which had a more reasonable rate. So to make a long story short, I like that Geico is doing all the leg work for me when the home insurance premium goes up a lot, because that is usually a lot of work for me.

Also, I am sure BHs are aware that Geico provides an 8% discount on car insurance if you are a Berkshire Hathaway shareholder, to include index funds :sharebeer ..it's there for the asking.

uuuuu
Posts: 21
Joined: Mon Sep 28, 2015 6:30 pm

Re: Home insurance going up every year...

Post by uuuuu » Fri Jan 25, 2019 7:01 am

pdavi21 wrote:
Thu Jan 24, 2019 12:42 pm
I go without for reasons:
1. Able to because house is paid off.
2. Financially ready for a total loss (or liability claim).
3. House is relatively cheap.
4. I am more careful than the average person.
5. They always have deducribles and play games to not pay out.
I didn’t realize that damage from natural disasters (wildfire, flood, lightning strikes, etc) depended on how careful the homeowner was :wink: . I think I understand what you’re getting at, though. For the things that cause catastrophic damage and are reasonably avoidable, you consider yourself more careful than others and so you are at less of a risk. I wonder if there are statistics that show what percent of total loss events are a result of not being careful (e.g., leaving stove on unattended)

I’ve heard of other folks doing this ... would you be willing to share how many years’ worth of annual premiums would the replacement cost of your house be worth? For example, if your house would cost $200k to replace and your annual insurance premium was $2k, it would take 100 years of premiums to “break even”. I am ignoring deductible here just for simplicity, but you could subtract the deductible from the overall replacement cost too, for a more representative analysis of the insurance benefit.

As a side note, I know in some locations, you could just demolish a ruined structure and move to a super cheap house to avoid the costs of rebuilding, but some folks are in certain neighborhoods are required to rebuild to the same (or better) standards and quality as before.

User avatar
nativenewenglander
Posts: 173
Joined: Sun Jul 30, 2017 6:05 am

Re: Home insurance going up every year...

Post by nativenewenglander » Fri Jan 25, 2019 7:24 am

stw wrote:
Tue Jan 22, 2019 8:26 pm
We've been in our current house for about 10 years - bought for about $260k. Our first insurance premium was around $1200 per year. For the first few years, we went with an independent agent who quoted from several companies. After a few years, the premium went above $2500. I shopped around and landed on Amica. Great rates, but by year 3 with them, they shot up to almost $4000! A friend suggested Ameriprise last year. We got solid coverage for just over $2000. Then year two, they jacked it to over $2400. In all of this time, we haven't made one claim.

Are there a few insurance companies that Bogleheads gravitate to?
I live in NH where the state website has a tab for all the homeowners insurance providers by cost. Over the years I have referenced it a few times to see what the low cost companies were in our case SAFECO a branch of Liberty Mutual. I used the same agent since 1983 when I moved to NH after college and purchased my first home. A few years ago we moved to a new region of the state, our agent suggested using someone local to us in our new town. We did that and the first year the rate was $484 the following year $625 then $808. At that point I called my old agent and sent her the paperwork of what was happening. She suggested raising the deductible to $10,000 as have insurance really for a total loss. We did that and our new rate was $475 it increased to $495 or so last year. The insurance company has been the same the whole time, it was all about the independent agency we used. So as others have said shop around with many different agents in your area, plus look at raising your deductible to lower your cost.

bryansmile
Posts: 170
Joined: Wed Feb 12, 2014 10:14 am

Re: Home insurance going up every year...

Post by bryansmile » Fri Jan 25, 2019 7:41 am

RickBoglehead wrote:
Wed Jan 23, 2019 10:54 am
Watch the news. These disasters, like the massive California fires that destroyed entire towns, the flooding last year from the hurricanes, this is being paid for. Everyone's rates in every state are going up, and will continue to go up. We all pay for this eventually.
Not every company is affected by CA fires, that's why I stick with regional companies.

User avatar
flossy21
Posts: 500
Joined: Sun May 27, 2007 2:04 pm

Re: Home insurance going up every year...

Post by flossy21 » Fri Jan 25, 2019 8:18 am

You may or may not be aware but, similar to your credit score, you have an insurance score. It's called a C.L.U.E. report and you are entitled to a free copy as part of the FCRA. You might check out yours to see if there is something going on there that is causing you to appear to be a higher risk to insure?

Here's a link where you can request your report.

https://personalreports.lexisnexis.com/ ... losure.jsp

User avatar
jeffyscott
Posts: 8409
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: Home insurance going up every year...

Post by jeffyscott » Fri Jan 25, 2019 8:21 am

uuuuu wrote:
Fri Jan 25, 2019 7:01 am
As a side note, I know in some locations, you could just demolish a ruined structure and move to a super cheap house to avoid the costs of rebuilding, but some folks are in certain neighborhoods are required to rebuild to the same (or better) standards and quality as before.
I'm not the person going without insurance, but they could just sell the empty lot after demolishing and let someone else do the rebuilding.
Time is your friend; impulse is your enemy. - John C. Bogle

J295
Posts: 2232
Joined: Sun Jan 01, 2012 11:40 pm

Re: Home insurance going up every year...

Post by J295 » Fri Jan 25, 2019 9:49 am

We had a hailstorm a couple of years ago and about $40,000 in new roof, new windows, etc. paid out to us by nationwide with no hassle whatsoever.

This past year there was a modest bump in our premiums of bringing them up to about $2400 per year for a $500,000 plus townhome.

Since the premiums have been gradually increasing over the past few years I contacted my agent, and reduced the premium down to $1500 per year by increasing the deductible from $2500 up to $5000. These numbers are approximate but I think the point is made.

We are bundled with nationwide on other coverages FYI. Also FYI, some of the neighbors didn’t realize they had a percentage of home value for their deductible. So when the hailstorm hit, my deductible was $2500, theirs was 2% of $500,000. Surprise!

User avatar
jeffyscott
Posts: 8409
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: Home insurance going up every year...

Post by jeffyscott » Fri Jan 25, 2019 10:21 am

bryansmile wrote:
Fri Jan 25, 2019 7:41 am
RickBoglehead wrote:
Wed Jan 23, 2019 10:54 am
Watch the news. These disasters, like the massive California fires that destroyed entire towns, the flooding last year from the hurricanes, this is being paid for. Everyone's rates in every state are going up, and will continue to go up. We all pay for this eventually.
Not every company is affected by CA fires, that's why I stick with regional companies.
Don't the national companies still sort of operate as separate entities in each state, in terms of setting premiums?

I don't think they are allowed by state regulators to transfer the cost of CA fire and coastal hurricane risks to people in midwest states, for example? I know some states (NC?) have forced insurance companies to spread the cost of hurricane risks to people living inland in that state, but they can not mandate that people in other states subsidize their coastal residents.
Time is your friend; impulse is your enemy. - John C. Bogle

Atgard
Posts: 420
Joined: Wed Apr 09, 2014 2:02 pm

Re: Home insurance going up every year...

Post by Atgard » Fri Jan 25, 2019 10:44 am

michaeljc70 wrote:
Wed Jan 23, 2019 1:28 pm
chessknt wrote:
Wed Jan 23, 2019 12:30 pm
I change all my insurance every year or two for this reason. Started using an independent insurance agent and it made the process a lot less painful.
I've always wondered, what keeps them from presenting only the policies with the best commissions? Also, they may only quote those companies that pay better commissions. Clearly they aren't working for free.
My dad had an insurance agent for like 30 years. Every year, the agent claimed to "shop around" for the best auto insurance, and every year said their current policy was the least expensive they could get.

I tried and immediately cut their premiums literally in half for identical coverage. I won't mention the company, but finding the lower quote only took about 15 minutes. :wink:

Rupert
Posts: 4122
Joined: Fri Aug 17, 2012 12:01 pm

Re: Home insurance going up every year...

Post by Rupert » Fri Jan 25, 2019 11:11 am

jeffyscott wrote:
Fri Jan 25, 2019 10:21 am
bryansmile wrote:
Fri Jan 25, 2019 7:41 am
RickBoglehead wrote:
Wed Jan 23, 2019 10:54 am
Watch the news. These disasters, like the massive California fires that destroyed entire towns, the flooding last year from the hurricanes, this is being paid for. Everyone's rates in every state are going up, and will continue to go up. We all pay for this eventually.
Not every company is affected by CA fires, that's why I stick with regional companies.
Don't the national companies still sort of operate as separate entities in each state, in terms of setting premiums?

I don't think they are allowed by state regulators to transfer the cost of CA fire and coastal hurricane risks to people in midwest states, for example? I know some states (NC?) have forced insurance companies to spread the cost of hurricane risks to people living inland in that state, but they can not mandate that people in other states subsidize their coastal residents.
Yes, you are correct. See, e.g., State Farm Florida Insurance Company, as distinguished from all the other State Farm companies. The practice of states making inland residents subsidize coastal insurance premiums is a very touchy subject in coastal states for obvious reasons. Given that coastal attractions do tend bring in the bulk of tourist-related tax revenue in such states, the coastal residents do have a leg to stand on.

User avatar
jeffyscott
Posts: 8409
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: Home insurance going up every year...

Post by jeffyscott » Fri Jan 25, 2019 11:34 am

Rupert wrote:
Fri Jan 25, 2019 11:11 am
The practice of states making inland residents subsidize coastal insurance premiums is a very touchy subject in coastal states for obvious reasons. Given that coastal attractions do tend bring in the bulk of tourist-related tax revenue in such states, the coastal residents do have a leg to stand on.
As a periodic visitor to coastal areas, it never has anything to do with other people being able to live right on the coast. I'd like the hotel to be there and have employees. It is doubtful that most of the hotel employees can afford to live right on the coast. It seems to be this is merely subsidizing the wealthy who can afford to live in the ocean front/gulf front property? Maybe they are subsidizing my hotel to some extent also?
Time is your friend; impulse is your enemy. - John C. Bogle

pshonore
Posts: 6669
Joined: Sun Jun 28, 2009 2:21 pm

Re: Home insurance going up every year...

Post by pshonore » Fri Jan 25, 2019 11:38 am

Rupert wrote:
Fri Jan 25, 2019 11:11 am
jeffyscott wrote:
Fri Jan 25, 2019 10:21 am
bryansmile wrote:
Fri Jan 25, 2019 7:41 am
RickBoglehead wrote:
Wed Jan 23, 2019 10:54 am
Watch the news. These disasters, like the massive California fires that destroyed entire towns, the flooding last year from the hurricanes, this is being paid for. Everyone's rates in every state are going up, and will continue to go up. We all pay for this eventually.
Not every company is affected by CA fires, that's why I stick with regional companies.
Don't the national companies still sort of operate as separate entities in each state, in terms of setting premiums?

I don't think they are allowed by state regulators to transfer the cost of CA fire and coastal hurricane risks to people in midwest states, for example? I know some states (NC?) have forced insurance companies to spread the cost of hurricane risks to people living inland in that state, but they can not mandate that people in other states subsidize their coastal residents.
Yes, you are correct. See, e.g., State Farm Florida Insurance Company, as distinguished from all the other State Farm companies. The practice of states making inland residents subsidize coastal insurance premiums is a very touchy subject in coastal states for obvious reasons. Given that coastal attractions do tend bring in the bulk of tourist-related tax revenue in such states, the coastal residents do have a leg to stand on.
If a company has extremely bad experience in say CA and the state refuses to approve rate hikes, said company has two choices. Raise rates in the rest of the country or stop writing business in CA. Which would you prefer?

daheld
Posts: 737
Joined: Wed Sep 13, 2017 8:14 am
Location: Midwest US

Re: Home insurance going up every year...

Post by daheld » Fri Jan 25, 2019 11:47 am

I know this will depend on many, many different factors, but is there a generally accepted rule of thumb for what a tolerable homeowners insurance premium increase would be? I just checked--ours went up about 7% from last year.

We pay what I consider to be a reasonable premium for our coverage.

pdavi21
Posts: 1296
Joined: Sat Jan 30, 2016 4:04 pm

Re: Home insurance going up every year...

Post by pdavi21 » Fri Jan 25, 2019 11:59 am

uuuuu wrote:
Fri Jan 25, 2019 7:01 am
pdavi21 wrote:
Thu Jan 24, 2019 12:42 pm
I go without for reasons:
1. Able to because house is paid off.
2. Financially ready for a total loss (or liability claim).
3. House is relatively cheap.
4. I am more careful than the average person.
5. They always have deducribles and play games to not pay out.
I didn’t realize that damage from natural disasters (wildfire, flood, lightning strikes, etc) depended on how careful the homeowner was :wink:
They actually do, very strongly. The homeowner chooses the home. Homes can have vastly different chances of total loss even when exposed to the same natural disaster. Even in the same neighborhood.
Last edited by pdavi21 on Fri Jan 25, 2019 12:09 pm, edited 1 time in total.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

Rupert
Posts: 4122
Joined: Fri Aug 17, 2012 12:01 pm

Re: Home insurance going up every year...

Post by Rupert » Fri Jan 25, 2019 12:00 pm

jeffyscott wrote:
Fri Jan 25, 2019 11:34 am
Rupert wrote:
Fri Jan 25, 2019 11:11 am
The practice of states making inland residents subsidize coastal insurance premiums is a very touchy subject in coastal states for obvious reasons. Given that coastal attractions do tend bring in the bulk of tourist-related tax revenue in such states, the coastal residents do have a leg to stand on.
As a periodic visitor to coastal areas, it never has anything to do with other people being able to live right on the coast. I'd like the hotel to be there and have employees. It is doubtful that most of the hotel employees can afford to live right on the coast. It seems to be this is merely subsidizing the wealthy who can afford to live in the ocean front/gulf front property? Maybe they are subsidizing my hotel to some extent also?
I was referring specifically to lodging taxes, etc., that become part of the state's general revenue, which benefits all state residents, not just coastal residents. Because all state residents benefit, shouldn't all state residents pay, at least to some extent? And, trust me, coastal residents are paying through the nose for their insurance, much more than inland residents pay. Many (most, in some areas) of those coastal residents are not rich. Drive a few miles inland in any direction and you will find ordinary people living in ordinary houses. Finally, note that coastal insurance rates tend to apply a lot more than a few miles inland. I pay those rates and I live about 40 miles from the coast.

Post Reply