Even though 2013 in Connecticut wasn’t a bad year for Homeowners losses, the trend we’ve seen in recent years of higher prices, higher deductibles, restrictive coverages and tighter underwriting continues, and appears certain to continue for the foreseeable future. You have probably already seen this affect you in the form of higher prices. I’d have to say the average premium increase we’ve seen on homeowners policy forms is over $100. But there’s more to the picture. Much more.
First, if you have a loss, you should only report losses that will cause you severe financial hardship. Reporting losses that are smaller could end up costing you more than the loss, and can even cause you to be nonrenewed by your company and/or be rejected for new insurance. A prospective client had two small claims on her policy from natural disasters here; both were for food spoilage and totaled just over $2000 for both. Yet when the client applied for new insurance, every company but one wouldn’t provide coverage. So, Myth 1 is busted: Losses that are related to catastrophes (especially if they’re small) won’t count against you. False! Companies simply no longer forgive losses….ANY losses. In a related note, if you have a lot of scheduled items on your policy, like jewelry items or silverware, you should review the items and delete smaller items. Those count as claims also, and a claim for a $150 pendant could cost you more than that in renewal rate surcharges.
To go along with that, take a look at your deductible. Half of our companies require a $1000 deductible on new submissions. If you still have a $500 deductible, you are being surcharged for the privilege. You should at least get a quote for a $1000 deductible. The credits are attractive now, and will almost certainly save you money in the long run. If you have a larger home, ask about larger deductibles; in some cases deductibles up to $10,000 may make sense.
Some people lament that a homeowners policy is being turned into a catastrophe policy. That may be lamentable, but it is true. Your goal with your homeowners coverage should be to protect against catastrophic property and liability losses. Coverage is still important, because you do want those types of losses covered as best you can. But by eliminating smaller losses and going with a higher deductible, you will minimize your costs for this ever more expensive coverage. And while it may not be what you want to hear, it is the best outcome you can attain. Questions? Call us for answers and advice.