While the residential mortgage market continued to pace a modest economic recovery in the U.S. in 2004, homeowners found themselves paying more for homeowner’s insurance — if they were able to find it.
Homeowner’s insurance protects homeowners from damages to their home that are sustained from bad weather, tornados, fire and similar casualty losses. (Flood insurance is sold as a separate policy.) It also protects them from potential liabilities that occur on their property — a neighbor’s child who falls on the driveway, for instance.
Mortgage lenders require borrowers to obtain a homeowner’s insurance policy as a means of protecting the collateral of their loans. Since state commissions regulate the insurance industry, availability and affordability of homeowner’s insurance varies among states. The National Association of Insurance Commissioners (NAIC) maintains a directory of state offices at its Web site.
The Wall Street Journal reported in May 2002 that 23 state insurance commissions had granted Allstate Corp. permission to hike homeowners’ premiums an average of nearly 20%.
In Texas, premiums have doubled in some areas while the number of homeowners whose policies were not renewed has soared. Meanwhile, State Farm Mutual Automobile Insurance stopped underwriting new policies for homeowners in Texas, California and Louisiana, the Journal said.
What are some of the reasons for these premium hikes and the drying up of policy coverage?
Major sources of blame are a rash of weather-related catastrophes, higher home-repair costs and the emergence of mold claims, says Robert Hartwig, chief economist for the Insurance Information Institute.
While mold claims have been around for a long time, Hartwig blames an explosion in claims and related lawsuits for directly impacting the availability of homeowner’s insurance in Texas. He says mold-related claims in Texas increased nearly sevenfold in the second quarter of 2001 over the first quarter of 2000. Over the same period, insurer payouts increased more than eightfold.
In addition, home-repair costs are increasing at 7% a year — well above the average rate of inflation, Hartwig says. Together, these factors are contributing to an average annual increase of 9% hike in premiums for homeowner’s insurance for 2002, the Institute estimates.
Homeowners in California are facing their biggest crunch in paying for homeowner’s insurance since the Northridge earthquake of 1994. According to a survey by the Insurance Information Network of California, insurers in that state paid $430.5 million in water-and mold-damage claims in 2001, more than double the amount paid in 1997, the Los Angeles Times reported in January 2003.
In addition to State Farm’s dropping new policies for California homeowners, the state insurance commission recently approved Allstate’s request for an 18.5% hike in homeowners’ premiums.
Sure, homeowner’s insurance is harder to come by and more expensive, but if you apply some of the basics in this educator you shouldn’t have too many problems.
For more articles on Home Insurance, visit http://www.bills.com/home-insurance/
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Help answer the question about home insurance
How much should I expect to spend on home insurance?I am planning a home purchase and I want to budget my monthly payment. In the area where I live, I expect to pay approx 650K for a 3bed, 2 bath home. When I calculate my monthly payment, I want to know the Home Insurance component as well as Property Tax for Fremont, CA if possible.
To make sure you have the right coverage, read any proposed policy very carefully! You have a period to review the policy during which you can cancel without a penalty. Be sure to ask any company or agent what that period is to confirm how much time you have to review the policy.
Be sure to answer all questions asked by the insurer or its agent truthfully and fully. If you are found to have withheld information that is pertinent to your coverage, you can have your coverage cancelled immediately.
Beyond that, you aren't required to volunteer anything that isn't asked or doesn't pertain to your coverage.
Sometimes, an agent or company will ask for your social security number, in order to do a credit check. While it isn't a bad thing for an insurer to check your credit, you NEVER want to volunteer your SSN. Given the fact of identity theft, this is critical information that you only want to give when absolutely required by law. An insurer can do a credit check without this number.
title insurance is cut and dry so to speak,
im going thru a large claim on mine right now,
they are really terrible to deal with.
they all have to provide the same coverage, and service as required by the state,
the fees they charge are usually state regulated also, they all charge the state regulated amount, ( like Gap insurance for a car ) its always the same for everyone.
a trip to the register of deeds will save you the money, ( I wish I would have )
if its not on the record the title insurance wont cover it anyway.
I had an easement the title insurance didnt find, and now the easement holder came in and is doing as he wishes all over our property, tearing down trees, removing a building,
It was on record at the court house, and the title insurance still dosen't want to pay.
Random guess might be ok at this stage, but I would go visit an insurance company in person and talk about what coverage would be best in my situation before I buy a policy.
I would first talk to who ever I have car insurance with or who I have had renters insurance with. My brother has homeowners insurance thru AAA (the people that help you if your car doesn't run or gets a flat), I have insurance thru State Farm, there are dozens and dozens of good companies. You can look at Consumer Reports magazine to find out what other people think about different comapnies.
Good question, I'm not sure. I also recently switched insurance companies, but in my mortgage, I'm responsible for it. No money is taken out for insurance. Alot of Texas loans are setup this way. In your case, I would contact your mortgage company and try to get it adjusted to the new rate (which means they will be charging you less per year). Its best homeowners shop around for insurance, mortgage companies certainly won't, what do they care about saving you money.
Good luck!
YEAH I FEEL YA GURL I'M 24 AND FEEL THE SAME DAMN WAY
They seem to be the cheapest, so what are you complaining about? I would check into higher deductibles to lower your insurance cost.
Drives me crazy (no pun intended) for someone to put a claim in on their insurance, expect the company to pay (in your case, $1500.) and then switch carriers. They paid your claim, didn't they? Boo, hoo, your rates increased.
You go to a local, independent agent, and have them shop it out.
You need general liability insurance, and commercial auto insurance. BUT. That commercial auto insurance, bringing people to appointments – is very, very, VERY expensive – like in excess of $10,000 a year. The general liability will probably run you around $1200 a year.
There's no such thing as "nonskilled medical care" provider.
What you're doing, is transporting people for a fee, like a limo, as far as the car insurance goes. On the general liability, it's probably going to be rated based on the projects that you help with – whatever the MOST expensive class code is, is what you need.
If you go to a State Farm, Nationwide, Allstate kinda direct writer agent, they won't be able to help you. You need an agent that can access Lloyds of London and other excess markets.
My home insurance has an inflation adjustment of 6%.
When I get the bill, I call about 3 other home insurers and get quotes.
I then call my original home insurer and tell them that I'm switching to the other insurance agency that appraised my home at a "normal" value.
If they don't remove the increase I switch.
Try Geico (for home insurance) if you have great credit
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