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You’re probably paying more — in some cases a lot more — for your homeowners insurance. Indeed, roughly 90% of homeowners saw their home insurance premiums go up over the last year, according to a Policygenius analysis of policy renewals from May 2021 to May 2022.
The company found that premiums rose by more than 12% on average; now homeowners insurance costs an average of $1,899 per year for a policy with $300,000 in dwelling coverage. And Insurify’s 2023 Insuring the American Homeowner report released this month reveals that home insurance prices rose 19% in 2022. What’s more, according to the company’s future projections, they’re predicted to climb another 9% in 2023.
Why the increase? Higher material costs and supply chain delays have made it more expensive to rebuild homes in the event of a claim. And increases in severe weather brought on by climate change have led to higher instances of fire and water damage, fueling premium increases.
It’s certainly worth a shot to switch and save, pros say. Ted Olsen, managing director at Goosehead Insurance, says there’s a common misconception that when a consumer stays with their current insurer, there’s meaning to that longevity. “Sadly, the opposite is almost true. Many insurance companies target specific consumer markets and when that consumer keeps the policy forever, even when their profile changes, they shift out of that target market and pay more. It’s definitely in the consumer’s best interest to find insurers that cater to the sweet spot they fit into,” says Olsen.
Note that there’s no hard and fast rule for how long you should stick with a provider, but Olsen says switching every 3 years is average. “You don’t want to switch too often, because companies do look at how long you’ve been with your current provider as one of their factors, and sometimes companies provide annual savings if you keep your policy,” says Olsen.
Before switching insurance companies, Quentin Coolen, CEO of Waffle, a one-stop shop for insurance, says it’s essential to compare different insurance options available on the market. “I can’t emphasize this enough: a cheaper rate is not necessarily a better deal. That’s because the coverage, the limits and/or the deductibles for the cheaper policy might not be as good as your current one,” says Coolen.
When weighing your options, Coolen says to make sure the company you’re considering is highly rated by third party sites like Bankrate or NerdWallet, has good customer reviews on third party sites like the Better Business Bureau and a good claim track record which should be apparent on any of the aforementioned sites. “If applicable to your situation, make sure that the new insurance coverage meets the requirements under your mortgage, lease or loan, if any,” says Coolen.
Know too that rates change daily. “Home insurance rates change daily, much like car insurance, because the financial markets affect prices on building materials and the labor necessary in rebuilding a home,” says Michael Orefice, senior vice president of operations at SmartFinancial, an insurance marketplace.
It’s also worth having an independent insurance agent help you, says Divya Sangam, insurance spokesperson at LendingTree. “Professional organizations like the Independent Insurance Agents & Brokers of America have searchable directories that will help you view all the independent insurance agents operating in your zip code,” says Sangam.
Once you receive a new quote that you’re happy with, use it as an opportunity to call your current insurance company and ask them if they can do better. “As a customer ready to switch, you now have the leverage. Use it,” says Coolen. He notes that it’s also wise to learn about the cancellation process, because depending on the type of insurance, there might be a fee for canceling your existing policy. “Before making any decision, make sure that the cancellation fee does not exceed the savings from the new policy,” says Coolen.
Many high-yield savings accounts and CDs are paying more than they have in about 15 years.
Alisa Wolfson is a freelance writer for MarketWatch Picks.
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