When Mother Nature strikes, home insurance premiums go up. Premiums on home insurance continue to increase due to unprecedented weather patterns that cause damage to homes and drive up repair costs.
Most insurance policies cover wind, fire, hail, and lightning damages but exclude unpredictable weather events like hurricanes, tornadoes, and earthquakes. When you are looking for a home, it is helpful to understand how home insurance premiums are affected by patterns in Mother Nature and what you can do to lower the costs.
What is Home Insurance?
Home insurance is a type of property insurance that covers damages and repairs to your house in the event of certain events. Homeowners pay a premium each month on this insurance to cover them in case of interior or exterior damage, an injury that occurs on the property, or loss or damage of personal belongings or property. If damage occurs, the homeowner files a claim and pays a deductible. The insurance company then pays for repairs to the home.
Within your home insurance policy, there is likely a clause that refers to an “Act of God” event. These are natural disasters that are outside of human control, such as a flood or tornado. These acts are typically not covered by insurance policies and must be covered by supplemental insurance policies for those who live in areas prone to these types of weather patterns. Work with a local real estate agent to get an idea of the type of home insurance you need to get.
Weather That Affects Insurance Premiums
The following are typical “Acts of God” that affect home insurance premiums. Some of these are covered, like wind and hail; however, the other types of events may not be covered by your policy. If you live in an area where one of these frequently occurs, expect to pay for an extra policy to cover damage from that type of weather.
•Hurricanes
•Winter storms
•Tornados
•Floods
•Earthquakes
•Wind and hail
How Does Weather Affect Insurance Premiums?
Extreme weather-related events cause damage to homes. When this happens, insurance companies are hit with hundreds or even thousands of claims at once they must pay out to repair the homes covered in their policies. In addition, the cost to repair the homes increases, costing the insurance company more to repair the home. For these reasons, companies end up raising home insurance premiums following big natural weather events so they can continue making a profit.
How You Can Lower Your Insurance Cost
Although the weather is out of your control, there are a few tips to try with your insurance company to lower the cost of your home insurance premium. Work with a Realtor who knows the local insurance markets and can help you find an insurance provider that works with you on the cost of your insurance.
- See if increasing your deductible affects your premium
- Save money by bundling your auto and home insurance policies
- Ask about credits your insurance company offers and see how you can qualify
Work With Your Local Realtor
Whether you are a commercial real estate investor or looking to buy your first home in Bowling Green, Kentucky, I’m always here to answer your questions. Simply email me at pthessen1@gmail.com.
-submitted by Perry Thessen
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