Each year, your homeowner’s insurance goes up and it leaves you wondering why. It is something that many homeowners experience.
Here are some of the main reasons why homeowners policies tend to go up each year.
Replacement cost
If your home were to be destroyed, your homeowners policy would cover the cost to build a new home. Since the cost of building a new home fluctuates with the price of labor and supplies needed, your coverage and hence your premiums also fluctuate.
In normal circumstances there is inflation in all prices in the economy so the replacement cost for your home tends to go up and hence your premiums also tend to rise.
Living expenses
In the case of the loss of your home, most homeowners policies will pay for you to stay somewhere else while your house is being replaced or repaired. You could be staying in a hotel for a long period of time and even some of your expenses for eating out at restaurants could be covered.
These costs of living elsewhere and eating out also rise with inflation so the amount of money your insurance company would need to pay rises over time. This need to cover additional living expenses causes your policy premiums to increase over the years.
Adding to your home
When you add to your home, these additional assets must be protected. Pools, decks, patios, garages, and sheds will increase your property’s value and therefore increase your premiums.
In addition these new structures can open you up to a larger amount of liability, for example individuals can slip by your pool. This makes your property a riskier investment and causes your premiums to rise.
Submitting claims
As with automobile insurance, if you submit claims on your homeowners insurance your premiums may rise, as your insurance company may judge your property a higher risk investment.
If you have any questions about your current policy, or you’d like to discuss a homeowners policy that is tailored to your situation, contact the experienced agents at John B Wright here.
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