My Homeowners Insurance Rates Go Up Every Year!
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May 21, 2014 6:16:00 AM
Why does my insurance premium continue to increase? It causes me to have an escrow shortage, raising my mortgage payment. Year after year, it goes up, and I haven't even made a claim. If I'm not making any claims then my premium shouldn't increase.
It's frustrating, I know. But there is a method to this premium madness. It's all in how we market it, how we market it to ourselves.
You read that correctly. It's how we market it to ourselves.
Let's compare the costs homeowners insurance to gas and groceries:
Gas fluctuates to the tune of 2 steps forward and one step back. We like the one-step-back. It's the 2 steps forward that frustrate us. We're fine with $3.25 a gallon, as long as it dropped from $3.50/gallon. We're not fine with it when it went up from $3/gallon.
We could shop for gas at the cheapest place in town. There's always that one station that's cheaper than the next. But eventually another place will have the cheapest gas. It never fails.
Same goes with grocery stores. They fluctuate with their marketing, with their service & products. It's like a rat race. One takes the lead, then gets passed, only to eventually take the lead again.
The true key with gas and groceries is finding our comfort zone. I don't like my wife shopping at Wal Mart. To me, Kelly is much safer at Kroger. Yes, we'll most likely spend more money. But we feel safer!
Same goes for gas stations. I don't want to wait in a long line to save 25 cents/gallon. My truck holds 20 gallons. I waited 10 minutes to save $5. Seriously!
Not only am I at the dumpiest convenient store in town, but I'm waiting in line to save a few dollars. Dollars are important, don't get me wrong. But our time is just as valuable, if not more.
Insurance companies are the same way. Just like below average gas stations and crowded grocery stores, there are low-level insurance companies. Companies that don't pay their employees well, therefore they don't get a good quality worker. And we, the customer, get to deal with that. We get the customer service rep who ins't in a good mood. Who hates their job. We get the claim adjuster who won't take their time with a claim. They aren't getting a competitive pay - they aren't giving a competitive effort.
That's how some companies work.
AND THEIR RATE ISN'T MUCH CHEAPER!
Let's say you're with Company A paying $800/year for your homeowners insurance rates.
Next year it goes to $1050. You're mad, so you switch.
After getting some homeowners
insurance quotes, you decide on Company B. Now you're paying $875/year. Company B realizes they're not charging enough and decide on a rate increase of 23 percent. Your policy renews and now you're at $1076. Your previous company? $1105.
Every company has a year ever so often that increases their rate beyond our comfort level. Go ahead, switch. Just hope your new company doesn't do the same thing at your renewal. There's a good chance they will. No company will always be the cheapest.
Then you'll switch to Company C. You're starting to see how every homeowners insurance company does the same thing, at different times. They all increase rates.
When Company A is high, Company B & C are low.
When B is high, A & C are low. And so on and so forth.
My insurance is with Travelers. They go up on my rates almost every year. Some years it's a minor increase. Some it's a larger increase. It may even sting for a minute. But I always come to my senses and realize the same thing happens with every company. I trust Travelers, so I stay put.
I've never had a bad claims experience with them. Not me personally, nor any customers of The Gann Agency .
I'm not selling you on Travelers. Your company may be just as good. And if they are, don't jump ship when their home insurance rates go up.
2 questions I'm often asked by potential customers:
How much is homeowners insurance?
Will this company go up on my rates next year?
My answer: Yes, every company will. Rarely will it go down, and if it does, you should be concerned.
Don't leave a good company just because the price increases, only to be with another company that will do the same.
Ride it out. Give it a couple years. Monitor your percentage of increase. I would say 15 percent or less is nothing to shop over.
If you're happy with the company, give them 2 years of over 15 percent increases before you shop.
To me, more than 2 consecutive years of 15+ percent, with no claim activity and very little credit change, is getting excessive. May be time to shop. These types of increases show a sign of weakness.
15 percent or lower - stay put. Especially if you've had no problems with their service.
You can download the 2013 company homeowners insurance rates increases. The Arkansas Insurance Department must approve all rate increases, which then publicizes that data. I've got it for you here:
My name is Nick. I'm the owner of The Gann Agency. Don't hesitate to contact me if you have any questions. I'm here to be a servant. Insurance allows me that opportunity.