Yikes! Beware of premium hike to homeowners insurance.

[Cosmos]

I just reviewed my policy renewal and I have sticker shock. For replacement cost coverage, a 26% hike in premiums for an 18% increase in dwelling coverage! I've had no claims, my credit rating is excellent and I get all the discounts to include one for the PSU Alumni Assoc. I've been with Liberty Mutual for five years now. I left USAA after 25 years for the same reason. Companies don't reward customer loyalty anymore. Instead they're more interested in 'churn'; i.e., putting the hook into new customers by offering low, introductory teaser rates. So once again I begin the process of shopping around for a new carrier. Anyone else experience this?

Thank you.

PS- I live nowhere near the coast.

 

[Erial_Lion]

With the increasing cost of lumber, labor, etc., isn’t it true that the replacement cost is likely rising a great deal?

 

[NC2017]

With the increasing cost of lumber, labor, etc., isn’t it true that the replacement cost is likely rising a great deal?

Yes, but on the flip side insurance companies should reduce premiums when replacement costs are reduced.

 

[Player2BNamedL8r]

Mine went up too, though not that drastically. We just bought our current house in January (meaning it was appraised less than a year ago), and still got the hike this summer. I’ll be shocked if they readjust when prices move back towards normal.

 

[Fac]

We had Liberty Mutual for years. Cost kept going up with no claims. Switched last year. They didn't care.

 

[tboyer]

Our homeowners insurance has almost doubled in 4 years. Rate of growth is about 20 percent a year. And we're not in a flood zone. People needing flood insurance are really going to get hammered.

 

[Lion84]

I work in the insurance industry (not personal lines) but can tell you with all the storms - hurricanes and the Texas ice storm the cat (catastrophic) losses are way up this year - companies plan for a certain average amount and if there are at or below that amount it doesn't impact them but when they hit above planned they look to increase premiums - that is what you are seeing, and also the continued losses for Auto insurance that can bleed over into other lines - best bet is what is suggested - shop around for a better deal - personal lines are a volume business so yes they don't really care if you stay or go.

 

[robmontour]

I work in the insurance industry (not personal lines) but can tell you with all the storms - hurricanes and the Texas ice storm the cat (catastrophic) losses are way up this year - companies plan for a certain average amount and if there are at or below that amount it doesn't impact them but when they hit above planned they look to increase premiums - that is what you are seeing, and also the continued losses for Auto insurance that can bleed over into other lines - best bet is what is suggested - shop around for a better deal - personal lines are a volume business so yes they don't really care if you stay or go.

Yep. Reinsurance premiums are going up.

 

[bdgan]

I just reviewed my policy renewal and I have sticker shock. For replacement cost coverage, a 26% hike in premiums for an 18% increase in dwelling coverage! I've had no claims, my credit rating is excellent and I get all the discounts to include one for the PSU Alumni Assoc. I've been with Liberty Mutual for five years now. I left USAA after 25 years for the same reason. Companies don't reward customer loyalty anymore. Instead they're more interested in 'churn'; i.e., putting the hook into new customers by offering low, introductory teaser rates. So once again I begin the process of shopping around for a new carrier. Anyone else experience this?

Thank you.

PS- I live nowhere near the coast.

It's amazing how insurers claim replacement cost is $500k for a home with a market value of $300k. They might be correct but then they should sell functional replacement cost coverage where policy holders could buy another $300k house instead of rebuild.

 

[Cosmos]

I work in the insurance industry (not personal lines) but can tell you with all the storms - hurricanes and the Texas ice storm the cat (catastrophic) losses are way up this year - companies plan for a certain average amount and if there are at or below that amount it doesn't impact them but when they hit above planned they look to increase premiums - that is what you are seeing, and also the continued losses for Auto insurance that can bleed over into other lines - best bet is what is suggested - shop around for a better deal - personal lines are a volume business so yes they don't really care if you stay or go.

When losses > plan is that not when you dip into the coinsurance kitty?

 

[PSUFBFAN]

I just reviewed my policy renewal and I have sticker shock. For replacement cost coverage, a 26% hike in premiums for an 18% increase in dwelling coverage! I've had no claims, my credit rating is excellent and I get all the discounts to include one for the PSU Alumni Assoc. I've been with Liberty Mutual for five years now. I left USAA after 25 years for the same reason. Companies don't reward customer loyalty anymore. Instead they're more interested in 'churn'; i.e., putting the hook into new customers by offering low, introductory teaser rates. So once again I begin the process of shopping around for a new carrier. Anyone else experience this?

Thank you.

PS- I live nowhere near the coast.

"Instead they're more interested in 'churn'; i.e., putting the hook into new customers by offering low, introductory teaser rates."

You are right. Most insurance carriers (and many other business) do offer lower rates to entice new customers and gradually increase their pricing to their existing customer base over subsequent years to help drive up total revenue and profits (think cell phone companies and cable tv companies). So, you can do two things.

One, shop your coverages every 3-5 years to find another carrier who will be offering those low introductory rates to you and make the switch. In addition, once you have a solid competitive quote from another carrier, call your current carrier and let them know where they stand in comparison and ask if there us anything they can do to keep you from making the switch. You might be surprised as to how often they will "take another look" and find some previously unapplied credits to lower your pricing.

If possible, it is probably best to establish a reasonable stable history with one carrier rather than jumping around to a new carrier every year. Only you can determine what is an appropriate higher price to pay for continuity as compared to moving your account.

 

[Cletus11]

Another thing, having just had a tornado go through my backyard and cause some substantial damage, I can tell you having a good insurance company matters. Several people in my neighborhood are now in big fights with the insurance company on what is covered and getting their money. I have a good insurance company (USAA) and it is night and day difference in how you are treated and getting things done. Have to keep that in the back of your mind also.

 

[ClarkstonMark]

I pay around $4500 per year to Citizen's for my homeowner's insurance.
Was talking to a neighbor whose house is probably valued at $80-100k more than mine.
He has comparable deductibles, etc, and is paying $1500. Uses Progressive.
I've always heard Progressive is a bitch to deal with, and I just had a no questions asked $80k claim on my house earlier this year, but I am definitely shopping around now,

 

[ouirpsu]

Our homeowners insurance has almost doubled in 4 years. Rate of growth is about 20 percent a year. And we're not in a flood zone. People needing flood insurance are really going to get hammered.

Flood insurance is not part of, and has no impact on, homeowners insurance. It is a federal government program.

 

[PAgeologist]

I got AllState. I didn't get any increase this year.

I wouldn't get Liberty Mutual just so my money didn't go towards those awful commercials.

 

[BBrown]

I got AllState. I didn't get any increase this year.

I wouldn't get Liberty Mutual just so my money didn't go towards those awful commercials.

+1.
I'm about ready to join State Farm so they maybe can have a new commercial or 2. I'm sick of f'n Aaron Rodgers.

 

[psuro]

I had a claim last year (roof) and my premium only went up a nominal amount.

 

[PAgeologist]

Flood insurance is not part of, and has no impact on, homeowners insurance. It is a federal government program.

For those in western PA... Homeowners insurance in PA will not cover mine subsidence either. I highly recommend you find out if you are at risk and buy the insurance. It's cheap!

Sorry for the sidetrack, but this seemed like a decent place to drop that PSA.

 

[NittPicker]

Yes, but on the flip side insurance companies should reduce premiums when replacement costs are reduced.

Now THAT'S funny!!! 🤣

 

[BobPSU92]

I just reviewed my policy renewal and I have sticker shock. For replacement cost coverage, a 26% hike in premiums for an 18% increase in dwelling coverage! I've had no claims, my credit rating is excellent and I get all the discounts to include one for the PSU Alumni Assoc. I've been with Liberty Mutual for five years now. I left USAA after 25 years for the same reason. Companies don't reward customer loyalty anymore. Instead they're more interested in 'churn'; i.e., putting the hook into new customers by offering low, introductory teaser rates. So once again I begin the process of shopping around for a new carrier. Anyone else experience this?

Thank you.

PS- I live nowhere near the coast.

Liberty Mutual? Only pay for what you need. Problem solved.

 

[jferretti]

Yes, but on the flip side insurance companies should reduce premiums when replacement costs are reduced.

Insurance is a regulated industry. States have insurance commissioners who address rates, rate increases, credit scoring for setting rates, etc. But while the citizens wring their hands over Britney Spears and masks the forces are at work in Harrisburg and other state capitols to make sure insurance industry types are placed on these commissions and to ensure a business friendly atmosphere where multi-billion dollar companies can turn a profit. IF you think I have an axe to grind it's because I used to work for those folks. It's borderline criminal how they capture our hard earned money.

 

[1995PSUgrad]

Used to have Allstate years ago, they cancelled my policy because I wouldn't switch my car insurance to them. Prior to Allstate, I had State Farm. One year when I was on vacation the water line that feeds the ice maker in my refrigerator started leaking. I got home to about 3 inches of water through most of the 1st floor of my house. Filing the claim and getting the money was a snap. However, about 3 years later I was buying a new house and they refused to write me another policy because I lived in a flood plain (wasn't required to have flood insurance though) and I had a prior water claim in the last three years. They said that it didn't matter that the water was from my ice maker.

 

[AWS1022]

"Instead they're more interested in 'churn'; i.e., putting the hook into new customers by offering low, introductory teaser rates."

You are right. Most insurance carriers (and many other business) do offer lower rates to entice new customers and gradually increase their pricing to their existing customer base over subsequent years to help drive up total revenue and profits (think cell phone companies and cable tv companies). So, you can do two things.

One, shop your coverages every 3-5 years to find another carrier who will be offering those low introductory rates to you and make the switch. In addition, once you have a solid competitive quote from another carrier, call your current carrier and let them know where they stand in comparison and ask if there us anything they can do to keep you from making the switch. You might be surprised as to how often they will "take another look" and find some previously unapplied credits to lower your pricing.

If possible, it is probably best to establish a reasonable stable history with one carrier rather than jumping around to a new carrier every year. Only you can determine what is an appropriate higher price to pay for continuity as compared to moving your account.

This is incorrect in many ways. It costs insurance companies way less to keep a customer than to add a new one. Most companies strive to improve their retention ratio every year. Premiums are driven by loss experience, outside costs, and other factors….not new vs renewal business. They don’t operate like cell phone companies at all. Also, many states provide laws that protect people against cancellation if they’ve been with their company for a certain number of years….changing companies causes you to lose that protection.

 

[AWS1022]

Another thing, having just had a tornado go through my backyard and cause some substantial damage, I can tell you having a good insurance company matters. Several people in my neighborhood are now in big fights with the insurance company on what is covered and getting their money. I have a good insurance company (USAA) and it is night and day difference in how you are treated and getting things done. Have to keep that in the back of your mind also.

Yes, insurance is not a commodity to be purchased on price. You may pay a little more to be with a good company, but if you need it, it’s worth it.

 

[fkkkjm]

This is incorrect in many ways. It costs insurance companies way less to keep a customer than to add a new one. Most companies strive to improve their retention ratio every year. Premiums are driven by loss experience, outside costs, and other factors….not new vs renewal business. They don’t operate like cell phone companies at all. Also, many states provide laws that protect people against cancellation if they’ve been with their company for a certain number of years….changing companies causes you to lose that protection.

agreed. Reviewed insurance industry extensively in grad school and retention ratio and loss ratio are two super critical metrics.

 

[Lion84]

When losses > plan is that not when you dip into the coinsurance kitty?

if you mean reinsurance - yes that is there to "smooth" losses but when there is an abnormal number of CAT losses in a year that will not be fully absorbed through reinsurance and even if it is reinsurance rates will then go up as well - also the market can effect premiums since insurance companies usually make a good amount of money in investements but these are lowere yield long term investments which they are required to do so as to not risk money set aside to pay future claims.

 

[gslachta]

Yes, but on the flip side insurance companies should reduce premiums when replacement costs are reduced.

Don’t hold your breath. You’ll asphyxiate. Well at least your face will be blue!

 

[AWS1022]

Insurance is a regulated industry. States have insurance commissioners who address rates, rate increases, credit scoring for setting rates, etc. But while the citizens wring their hands over Britney Spears and masks the forces are at work in Harrisburg and other state capitols to make sure insurance industry types are placed on these commissions and to ensure a business friendly atmosphere where multi-billion dollar companies can turn a profit. IF you think I have an axe to grind it's because I used to work for those folks. It's borderline criminal how they capture our hard earned money.

Apparently you didn’t learn much when you worked for them.

 

[Alphabets]

I might be in the minority here, but I actively called my insurance company a few months ago to raise my insurance. With the increase in values, I had an appraisal and re-evaluation of insurance coverage done. If values drop, I will make the call again.

 

[AWS1022]

It's amazing how insurers claim replacement cost is $500k for a home with a market value of $300k. They might be correct but then they should sell functional replacement cost coverage where policy holders could buy another $300k house instead of rebuild.

Market value has nothing to do with rebuilding a house after a loss. In most total losses for insurance companies the homes are under insured….so people can think their house shouldn’t have a replacement cost of $500k, but in a very high percentage of cases, that $500k ends up being less than the final cost.

 

[PSU20]

When insurance companies calculate replacement costs, one hidden cost that is "now" signicant is Shipping Costs, since the cost of a gallon of gasoline is about 30% higher than a year ago. I have witnessed this first hand from wholesalers and retairlers who blame the increased cost of materials on shipping costs.

 

[NC2017]

Don’t hold your breath. You’ll asphyxiate. Well at least your face will be blue!

Oh, I know. When you make a mistake, it's insurance fraud and a felony. When they intentionally withhold a claim based on fraud, you get to sue them for the amount in question. You might win, but many don't. Quite a racket, complete with bi-partisan legislative backstops.

 

[AWS1022]

Oh, I know. When you make a mistake, it's insurance fraud. When they intentionally withhold a claim based on fraud, you get to sue them for the amount in question.

You can sue them for a lot more than that.

 

[NC2017]

You can sue them for a lot more than that.

That very much depends, and btw, enjoy the attorney's fee.

 

[tboyer]

It's amazing how insurers claim replacement cost is $500k for a home with a market value of $300k. They might be correct but then they should sell functional replacement cost coverage where policy holders could buy another $300k house instead of rebuild.

Have to be careful with functional replacement -- that could mean replacing a 1920s Craftsman bungalow with a double-wide.

 

[Cletus11]

That very much depends, and btw, enjoy the attorney's fee.

exactly, a common man doesn't have the pockets to sue an insurance company. heck, a lot of business's that screwed by insurance companies can hardly afford to battle them.

 

[bdgan]

Market value has nothing to do with rebuilding a house after a loss. In most total losses for insurance companies the homes are under insured….so people can think their house shouldn’t have a replacement cost of $500k, but in a very high percentage of cases, that $500k ends up being less than the final cost.

You miss the point. If your car is damaged the coverage is limited to the market value. It makes no sense to spend $15,000 to repair a car that's worth $10,000.

IMO the same thing should hold true for houses. If you're home is worth $300,000 it doesn't make a lot of sense to spend $500,000 to rebuild it.

I'm not an insurance expert but I fought this battle insuring businesses. I knew that we would have no desire to rebuild everything as it was. We might be able to get by with less square footage, use different materials, etc. I was able to purchase functional replacement cost coverage at a lower premium.

 

[bdgan]

exactly, a common man doesn't have the pockets to sue an insurance company. heck, a lot of business's that screwed by insurance companies can hardly afford to battle them.

That's why companies settle out of court.

 

[bdgan]

Have to be careful with functional replacement -- that could mean replacing a 1920s Craftsman bungalow with a double-wide.

I agree that you have to know what you're doing but your example is quite extreme.

Old homes are a great example. Back in the day they all had things like expensive gum wood trim. Some city homes in bad neighborhoods sell for $100k but insurers demand they be covered for $500k replacement cost. Reality is that occupants could buy a more modern up to date home for $200k.

 

[AWS1022]

You miss the point. If your car is damaged the coverage is limited to the market value. It makes no sense to spend $15,000 to repair a car that's worth $10,000.

IMO the same thing should hold true for houses. If you're home is worth $300,000 it doesn't make a lot of sense to spend $500,000 to rebuild it.

I'm not an insurance expert but I fought this battle insuring businesses. I knew that we would have no desire to rebuild everything as it was. We might be able to get by with less square footage, use different materials, etc. I was able to purchase functional replacement cost coverage at a lower premium.

Functional replacement cost may be an option….some states don’t allow it. But if someone has guaranteed replacement cost, then market value means nothing because insurance companies are contractually obligated to build the house back as it was.