Understanding Insurance Increases & Underwriting

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We have heard stories about or experienced first-hand, rising homeowners insurance rates. Rosie on the House Certified Partner, Clay Janson, agency principal with Phocus Insurance Services, discusses the causes of the rate increases and helps us navigate ways to help reduce those costs.

The insurance industry is very complex. Clay tells us that no two insurance carriers are created equal. Therefore, this information will be generalized. Every carrier rates the importance of potential claims you might have on your home differently.

Causes

Let’s begin with why rates are increasing.

It is no surprise to many of us that the increasing number of natural and manmade disasters has risen over the past few years. From hurricanes to forest fires and a slew of other causes, insurance companies have been hit hard financially paying out claims. Clay tells us billions of dollars in claims, coupled with increasing potential for claims, whether perpetrated by man or nature, are causing rates to rise for companies who not only try to remain solvent but also profit. Increases of 25% to as much as 75% in premiums are not unheard of.

Your Options

If you get a notice that your premiums are going to increase, or even be canceled, Clay tells us there are some steps you can take. The insurance industry term for making improvements and repairs to your property is called “hardening.” This means you are investing in your house, home, castle, or cabin by removing threats of potential damages leading to a possible claim. Some steps are big, and others are low-hanging fruit. Clay warns us again that every carrier is different, so check with them before making any significant investment to determine if your actions will help reduce premiums.

• Roof. One of the most common claims is damage from wind, hail, and debris to your roof. If you replace your aging roof with a new system, that could lead to a discount.
• Water Shut Off Systems. This is a leak detection system that will detect water on the floor. Once detected, it will shut off the water supply to your home. Insurance companies pay out huge sums for interior water damage claims. Installing such a system could lead to a discount.

  

• Updates to Older Electrical Panels or Systems. By bringing older electrical systems up to the current code through panel updates, installing ARC fault and GFI outlets, and adding smoke and CO2 detectors, you may be eligible for discounts.
• Landscaping. If you are in an area prone to wildfires, follow the advice and directions of your local Urban Wildland Interface with your landscaping systems. This will reduce the likelihood of a fire reaching your home.
• Tree Trimming. Make sure your trees are not a threat to your home from damage by wind or abrasion.

Clay also tells us that insurance companies will often send a letter that outlines improvements on your outdoor property that you may be required to make. There are several ways companies know about these improvements, including the use of aerial and ground inspections. That is satellite imagery and drive-by inspectors.

Selecting Insurance

There are two basic approaches to selecting the insurance program that is right for you.

You can interview carriers yourself by contacting them individually. Clay advises again that no two companies use identical criteria for determining premiums. Before you contact them, asses your personal coverage needs.

The other approach would be to engage an independent insurance agent. An independent insurance agent has access to multiple carriers and the education, licensing, and experience to help you determine your insurance needs and research the best carrier for your situation.

If you want to search on your own, Clay advises there are several industry discounts that you should be sure to ask for. When you engage companies, ask about these discount opportunities.

• Paid in Full Discount. Is there a discount if you pay your annual premium in full, upfront instead of monthly payments?
• Advance Quote. If you inquire several weeks before your current policy lapses instead of waiting until the last minute, some carriers will offer a discount. Clay says a two-week window would be a minimum.
• Bundle. Combining your home and auto insurance often yields a discount.

  

• Alarm systems. Let the potential carrier know if you have an alarm system in your home for fire, burglary, or even the water leak detection system we mentioned earlier.
• Credit Score. Whether you are shopping or renewing, and if your credit rating has improved or is a good rating, this may also lead to a discount.

Keep copious notes regarding quotes from different companies. Comparing them may be tricky as they are rarely apples-to-apples.

If you go online, you may be directed to a 1-800 number. Clay recommends calling and talking directly to an agent.

This is a lot to think about. If you are research savvy and have the time to research options, you will benefit from the information above.

If such a task seems daunting and overwhelming, contact an Independent Insurance Agency. These licensed professionals will do all the footwork for you. They know the discounts and can negotiate on your behalf, which will likely save you time, and money, and maybe even thwart a headache.

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Content Partner

Based in Phoenix and serving all of Arizona, Phocus Insurance Services has been writing Rosie and Jennifer Romero’s personal and business insurance for over 35 years. Offering homeowners, auto, motorcycle, boat, commercial, general liability, and many other types of insurance, our independent insurance agency will take the time to find the right policy and pricing to fit your personal needs. We provide free quotes from over 12 different insurance companies. Visit us anytime at https://phocusinsurance.com/ for more information and free online quotes.

PODCAST

Yikes! Those spikes in home and car insurance coverage! Relax and let Clay Janson of Phocus Companies explain what you can to do find better rates and coverage. The most important item on home insurance you need to look at first. What homeowners are required to do after a disaster.  Why companies leave or stop writing policies. Flood insurance. And more!

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