If you’re like most home owners in Colorado, you’ve seen your rates going up on home insurance. It doesn’t matter which company you’re insured with, there’s an overall trend in Colorado and across the country. That trend is that home insurance rates are too low for the market place and rates are on the rise.
What’s driving increased rates in Colorado is loss ratio. Up until 2020, Colorado had suffered many years with higher than acceptable loss ratios. Loss ratio is the amount of money an insurance company pays out in claims versus what they receive in premiums. A loss ratio of 90% means that the insurance company pays out $.90 in claims for every dollar they bring in. A loss ratio of 90% is pretty good. In 2009, the combined loss ratio of all home insurance companies in Colorado was 169%. A loss ratio of 169% means that insurance companies are paying out $1.69 for every $1.00 collected. Any business-minded person can see that this is a losing formula. Next came 2010, which did little help for home insurers. The 2010 loss ratio in Colorado for all home insurance companies combined was 137%. 2011 results have not yet been made public, but based on catastrophic losses from a deep freeze we had in February as well as the hail storms of the summer of 2011 – the loss ratio will likely be well above 100%. Fast – Forward to 2012. Obviously numbers haven’t yet been released since 2012 is still not over, but we have a great deal of data to look at. In June of 2012 the fourth costliest hail storm hit the south Denver Metro area and during late June and into July we had the most destructive wildfires in Colorado history, destroying over 650 homes. For all of these reason we’re seeing home insurance companies take rate increases into the double digits. We’re even seeing some companies non renew household or pulling out of Colorado all together. So what can you do? Take a look at this comprehensive list of 6 things which will lower your home insurance premiums!
- Choose a higher deductible. The days of a $500 or even a $1000 deductible are in the past. People don’t think twice about a $2,500, $5,000 or even a 20% deductible on their health insurance, why not take that philosophy to home insurance? The average person files a home insurance claim about every 14 years. A higher deductible will save you a great deal over 14 years – far more than the cost of the higher deductible at the time of a loss. I offer a number of deductible options to help you manage your costs.
- Refrain from filing smaller claims. A home insurance claim can mean as much as a 40% surcharge in your home insurance rates or more, or worse yet, your company may drop you and you may find it difficult to find coverage with another company. It’s always a good idea to discuss options with a trained professional like Mike Schmisek before you file a claim as even a claim that results in $0 money paid out, could impact your rates.
- Replace your roof. Even though catastrophic wildfires have been making big headlines, hail continues to be the number one claim in Colorado on home insurance. A new roof, especially a concrete roof, a tile roof or UL4 rated asphalt shingle roofing will reduce your rates by as much as 50%.
- Bundle your Car Insurance and your Home Insurance. Insurance companies offer big discounts on your home insurance and on your auto insurance if you’re willing to insure both with the same company.
- Fix up your house! With record losses in home insurance, many companies are tightening up underwriting rules. If you’re house-paint is peeling or your driveway is cracked, you may have been placed in a ‘high risk’ insurance company – where premiums can be double what you’d pay with a preferred insurance company. Call or contact us to determine what you should do in order to be able to insure your house with a preferred insurance company.
- Keep your credit score up! This may sound odd, but your credit score has a direct relation to the rate you get on your home insurance premium. Statistics show that people with good credit take better care of their homes and this leads to fewer claims. It’s oftentimes easier said than done, but maintaining good credit will save you on your home insurance costs!
The biggest piece of advice I have is to find an agent and company that you trust and work with that person to find the coverage that fits your budget. Insurance coverage varies greatly from company to company and the lowest cost policy is rarely the same coverage as the higher or mid – range priced policies.
