Homeowners Insurance

[jAngiel]

Anyone else get hit with a huge increase recently?

We have never had a claim with this company and have been with them only about 4 years. We received a letter stateing they have changed the way they do thier insurance priceing and ours has increased. The letter didn't say what the new premium would be but said it would come in the mail shortly.

I was curious and went online to check it out, an increase of only 132% .

They must be trying to recoup all the money they had to shell out for the hurricanes. I think I may have to find another company unless all the others are doing the same...

[Hellrazor]

CEO wants a new yacht, sports car, summer home, winter home and a bonus..

[Ed62]

It wouldn't surprise me if they all raised their rates because the experts are predicting more powerful storms, supposedly due to global warming. I don't think they're predicting an increase in the numbers, only the severity.

Ed

[lago]

Just received our renewal a week or so ago. The premium has just about doubled in 4 years. We did have 2 claims, theft & storm, but I think the storms the past 2 years have made all ins. companies raise their rates.

[DUD]

One of My cars got adjusted $20.00 higher, but Home is same price as last year. Bill

[cabinetman]

Good thing you don't live in Florida. We never had a claim, and our premium went from $1200/year to $3800/year. Very few companies still write HO in Fla. Ours (Tower) quit, and most all HO now goes through Citizens, which is basically a State operated agency. For the premium, the companies are betting that we won't have a claim, and for 15 years we didn't, like a lot of policyholders. So, when they lose and have to pay out, they quit. It should be illegal. A lot of them still sell other type of insurance in Fla.



"I'M NEVER WRONG - BUT I'M NOT ALWAYS RIGHT"

[jAngiel]

Good thing you don't live in Florida. We never had a claim, and our premium went from $1200/year to $3800/year.

I guess we're getting the same crap here in Oklahoma, mine is going from $1440 to $3350, they use the fact that we are in tornado alley as the excuse. Anything wind or hail related has a huge deductible, 2% of your coverage amount. After the big tornado of 99 (I think) some companies, State Farm included, quit issuing new policies in the state. State Farm as since restarted but I imagine at higher premiums.

[DUD]

I have had the same Insurance company since the 60's and mine is probably going to go up at some point. We have lived thru several tornados here, but luckily no damage. Bill

[scorrpio]

We sit on some heavy-duty bedrock here in Northern NJ. Rates stable so far. Though pundits on Discovery keep predicting doom and gloom for the region.

[sacherjj]

I started working at an insurance company just over a year ago (State Auto Insurance) and have been learning all kinds of things about this industry. I didn't know until I started working here, but almost all insurance companies also buy insurance. (It is called re-insurance.) The price of this is going up severely. The way around this is to be large enough that the company has risks spread out. This means the it isn't likely that you have serious hail damage in the Midwest at the same time you have hurricanes in the South, etc. That is about all the info I have. I just program, not underwrite.

[Jeffrey Schronce]

Anyone who has any questions regarding homeowners or any other lines of property/casualty insurance is more than welcome to send me questions via email or PM. I'm probably the biggest insurance nerd you will ever meet.

I will address some of the questions presented here :

1) jAngiel, sounds like your company has gone to a multi-tier approach and you were determined to be a below average risk. The key elements determining tiering for property are your insurance score (credit base score which is a reliable predictor of future losses), the area of the state in which you reside, the age of your home, your proximity to fire protection (FD and hydrants), value of your home, prior losses for you or the home. There are countless other items involved. Please email or PM me and I will try to help determine the problem you are encountering. I believe I can point you in the right direction.

2) Ed62, state departments of insurance will not allow rate increases based upon predictive weather modeling. I know, we tried. Companies will only be approved for a rate increase by the state department of insurance if written premium plus investment income do not exceed losses, loss adjusting expense and underwriting expense (ie, company paid out more than they received).

3) lago, doubling in 4 years is to be expected in TX. Homeowner rates in TX are among the worst in the country. The policies are complex, multiple peril deductibles and do not conform to industry standard policies. You face some nasty perils in TX, particularly wind and hail. Mold claims were all the rage a few years ago in TX until they got that under control. Personal auto is quite unusual in TX as well.

4) DUD, that is amazing and count yourself as being quite lucky. Most (99%) of homeowners will increase every year. While the base rate may not be increasing, the amount of your policy is adjusted for inflation based upon reconstruction costs every year. This increase is usually 3-5%, but can be higher in areas like MA, CA, NY.

5) cabinetman, Tower Perrins FL operations was kind of similar to Citizens, except it was not owned by the state. However it depopulated a ton of the state wind pool policies, receiving FAT incentives from the state. Unfortunately, that didn't work out so well for them, thus most folks were banished back in to the state pool now called Citizens Insurance. Citizens is exactly what you would expect of a state ran insurance program. Full of corruption, fraud and other nastiness which you get to pay for in the end. Back in the day (early and mid 90s) insurance companies that withdrew from property lines were forced to withdraw from auto and other more profitable lines. I have not kept up with the FL markets, but I guess they had to give up on that just to keep some auto carriers.

6) jAngiel, Oklahoma has historically always been an unprofitable state for most companies. The catastrophic nature of wind there is the tip of the iceberg. 2% wind/hail deductible was invented in FL in the early 90's to combat large hurricane losses. It was quite effective (2% of $200,000 house is $4,000 deductible) resulting in huge drops in severity of claims from wind. $4000 savings on roof damage is big.

7) scorrpio, property rates in NJ are actually one of the only reasonable insurance policies in your state. Everything else is shot! Auto is a killer, medical mal is nuts, product liability is terrible . . . .

8) sacherjj, are you in State Autos home office? I did some consulting work for them last year in their non-standard auto program. State Auto is a really neat little company. Brand recognition is poor outside the Ohio area. Plus you have other strong regional carriers like Westfield to compete with on a regional basis. So you are programming huh? PMSC based?
Regarding reinsurance, yes it is at an all time high. Reinsurance rates were destroyed by 911. Many reinsurance treaties were terminated and companies simply could not find coverage. That is what all those folks down South are running into with their homeowners rates. Reinsurance companies are pulling out of FL, TX, etc and leaving companies fully exposed to losses. While it is true that company size reduces need for reinsurance, even the largest carriers in the world buy reinsurance quite frequently.

[L. D. Jeffries]

Can't say about the rest of the US, but my home owners does go up about every 2 years but that's because I have "full replacement". Guess inflation does that. Auto is another story; haven't had an increase in a long while! Guess it depends on where you live. We're pretty cool & calm up in northern NY.

[Cody.h]

As someone who used to live in NJ but now in TX for 7+ years I can testify to what Jeffery is saying about insurance in both states.

April 1999 living in Laurel Lake,NJ extreme South Jersey still pretty rural...$75,000 homeowner policy with State Farm...prem increase from $235.00 to $265.00. Auto insurance with Allstate on 1993 F-150 100,000/300,000, $500.00 deds both coll and comp...clean driving record 1 year perm $1650.00.

April 2005 living here in Lubbock now...alarm goes off at 5:30 am ..hearing tap tap tap on the glass...light hail at our house couple very small marks on the roof of same truck...much worse at the dealership 2 miles away where I work..$695,000 in damage. I leave work that evening at 6:00 pm and go to in-laws house to cut grass as they're outta town. Head home about 7:30...bad clouds in the sky...black as coal. 2 miles from the house the hail starts...about the size of golf balls, get about a mile from the house and hail is now at least tennis ball size...windshield in the truck breaks and noise from the hail hitting the truck is so loud can't hear the radio or my cell ringing. Get to the house just as it stops and the ground is covered with hail, garage door roof and facia ruined. Almost $7000.00 damage to the house and $2200.00 to the truck.

Homeowners is with State Farm $117,000 policy...prem went up frpm $1200 to $1350 for next year...100,000/300,000 with 100.00/250.00 deds on same truck and 06 Montego...both drivers now with speeding tickets on record and LOML an at fault parking lot accident and comp claim from the truck our progressive policy went from $1400.00/yr to $1550.00/yr still less then I was paying just for my truck in NJ.

Insurance for anything is just crazy...we won't even talk about health insurance.

[oakchas]

Can't say about the rest of the US, but my home owners does go up about every 2 years but that's because I have "full replacement". Guess inflation does that...

Watch that "full replacement"... Don't let it lure you into a false sense of security. I'll relate a true story... you decide. And, maybe J.S. can add to it.

1998 June or July... can't 'member now.

I was remodeling my house. Adding a bath, so had all the water shut oiff and was staying with my fiance at the time.

I was on my way out to the house (it's in the country, fiance lived in town). My cel rings.

"Charlie?"
"yep"
"hey, this is Joni at work...Where You at?"
"On my way to the house from Menard's"
"Charlie, the sheriff's lookin' for you!"
"heh, heh! What did I do now?"
"No, really... Something about a fire at you house..."
(I could tell by the tone in her voice it was bad....)
"Uh, how bad is it?"
"I hear there's nothing left"
"I'm on my way now, talk to you later"

Called fiance, kids (all grown and out of the house) and raced out there.

Found a smoking hole in the ground, State fire marshall was there.... And some of the local vounteers.

I asked what happened... It was apparently an LP leak... Blew the house apart... and cracked the foundation at the corners an inch or better... TOTAL TOTAL TOTAL loss. Panels of wall blown from epicenter 50 feet or more. 2X12" about 8 feet long impaled in the far side of the ditch across the road from the house about 100 feet.

BOOM!

Okay, I had full replacement, too... but there is a max on that... based on constuction costs. So, house is ~1500 sq feet... I get ~80K for the house and 1/2 that ~40K for contents... that's normal 50% of House value for contents.

Needless to say, I could not replace the house for ~80K I barely made the same square footage with the full $120K... And had to do a PRE FAB to do that!

Full replacement usually means if lightning hits your TV... you get a new one... But if you have a catastrophic loss... you will not be able to rebuild the same size house with the proceeds of your insurance... Unless, you have special riders...


BTW... Insurance co. Dropped me about 2 years later.... and you try to find Ins. if you've been dropped! Almost had to get state insurance.... which is HORRIBLE...

As usual, your mileage may vary... but check your policies, folks!

[paintandbodtman]

Full replacement cost on homeowners policy usually caps at 125% of coverage amount. This was implemented after hurricane hugo for most of the southeastern states, insurance companies supposidly got hit hard because a lot of policies coverage amounts were not automatically adjusted as they are now, based on inflationary costs.

wayne