Every now and then home insurance rates go up. This also applies to other types of insurance such as those for cars and travel.

The latest AA Insurance Shoparound Index showed that home insurance prices went up 2.4 percent in a period of three months ending September 2012. For the 12-month period, the increase noted was 5.2 percent. Contents insurance followed the same trend and went up 0.8 percent or 3.3 percent for the 12-month period.

The Shoparound index calculates the average of the five cheapest quotes for every property. For both the home and contents insurance cover, the rate of increase was one percent in the last quarter and 7.2 percent year-on-year.

So what really causes insurance premiums to go up? This is a common concern among policy owners, many of whom are taken by surprise when they find out the rates have gone up even by just a few dollars.

Common reasons

Policy changes – Expect your premium to rise when changes are made in your policy such as your credit score and previous claim history. Insurance providers are quick to pump up their rates when they feel you are at a greater risk or even if their expenses have gone up.

Inflation guard – This refers to an endorsement on your policy that adjusts when inflation occurs every year covering building materials and other costs. This helps insurance providers pay higher or closer to the value of your loss or damaged property in the event you file a claim. The downside of this is an increase in your premiums as well every year.

Events in community – Another factor that can lead to a hike in insurance premium is the occurrence in your community. If more crimes or floods are recorded, for instance, providers often charge you more to cover your property.

Ways to avoid increases

You can take steps to limit or avoid an increase in your home insurance each year. Take the time to learn about your policy and get in touch with your insurance agent so he or she is better informed of your situation. You have to be the one to supply information such as if you’re qualified for discounts in order to avail of a lower rate.

Don’t hesitate to shop around for insurance quotes for your home every few years. There’s no rule that says you have to stick it out for the long term with your current provider. You can save money moving forward by transferring to another company that offers a better deal. But then again, the trick is to compare rates first.

Find a time to evaluate the contents of your home as well. Take note of valuables or properties that you have disposed of and inform your agent about it to lower your rate.

One final note here is to get the best rates, experts are on in saying that shopping around is a very important step. Policy holders should do this upon receiving their renewal letter and use both comparison sites and products that are sold directly.

Photo via insuranceassistance.net

About the guest author:

Eva is a writer who also works as an insurance agent on the side for HomeInsurance.com. She agrees to expert opinion stressing the importance of comparing prices first before deciding on a provider.

Originally posted on October 25, 2012 @ 3:30 pm

Business, General, Tips

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