May 12th, 2015
There are several factors that go into whether homeowners insurance premiums will increase. From the frequency of natural disasters to other incidents that result in damage to the property, homeowners should consider whether they are at risk for higher insurance costs.
Here are five warning signs home insurance premiums will rise:
1. The aging roof needs to be replaced
While homeowners are aware that the condition of their home will affect their insurance rates, there are certain red flags they should be on the lookout for. When a home ages, there are parts of the home that are more vulnerable to destruction, which may lead to harm. Insurers often look for indicators that a home is more likely to experience damage, such as the age of the roof, Zillow stated. Homeowners should consider whether to replace their old roof. They could obtain a discount if they perform renovations to prevent property losses, Allstate said.
2. A personal injury occurs on the property
Since homeowners are liable for injuries that happen on their property, they may end up with more costs to pay for medical and legal bills. Once homeowners make a liability claim, their rates may go up because of the high cost of this kind of claim, CNNMoney reported.
3. Credit scores recently declined
Although insurers will look at homeowners' credit standing before setting a rate, they may choose to raise insurance premiums if consumers' credit scores decrease. Because policyholders with poor credit are deemed more risky, they will pay more each month.
4. Homeowners experience theft
Two of the biggest causes of large premium increases are theft and vandalism, according to CNNMoney. A single break-in doesn't just say something about the security of the homeowners' property, but also the safety of the neighborhood. Insurance companies might see a claim for a theft come in and decide that the neighborhood itself is susceptible to crime. Vandalism could also mean an unsafe neighborhood. Homebuyers could research crime rates in places where they are looking to move in to avoid these insurance premium hikes.
5. There is an addition to the house
Certain home additions may add to the danger of owning a home. These may include trampolines or pools, which could increase the chance of an injury on the property, according to Zillow. Be careful what kind of additions to include in the home in case they also contribute to overall insurance costs.
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