Home insurance going up?

Home insurance rates are going to be going up in 2010. The insurance companies have taken a lot of hits for home insurance water claims and they will be looking to get some money back.

Your home insurance rates will normally go up each year in part because of the automatic inflation increase on the home value. This is usually 6-8% and often is balanced out by your gaining another discount. Discounts that increase over time can include claims-free, your age, loyalty or now having more then one policy with that insurer.

What is different this year is that there were a tremendous amount of water claims. Many were due to sewer backup. The insurance companies have paid out a lot of money so are looking to get some of that back. They also want to restrict future payouts in areas that are deemed higher risk.

What does this mean to you? If you live in an area that has had sewer back-up claims then your rate for this coverage could jump from $35/year to as much as $400/year. That is correct, $400! Some companies will only give a minimum amount of sewer back-up coverage and then you have to buy higher levels. This puts you in the position of having to choose how much is enough.

You need to be very careful about what you do with this situation. If you have a finished basement then a sewer backup can run into $25,000 and up very quickly. With sewer back-up you often have to tear out the rugs, replace the drywall and the furniture. Anything that was on the floor is likely ruined.

Talk to your broker or agent about what your options are for your home insurance. Remember, going to a higher deductible means that if there is a claim then that is the share you pay out of your pocket.