Home owners beware: “Your homeowner’s insurance now probably covers less while costing more,” The Wall Street Journal reports.

Home owner deductibles have been rising the last few years, as home owners who may have once seen $250 to $500 a claim soar to $1,000 to $2,500 a claim in recent years.

There’s been a move by the industry to go to percentage-based deductibles, which have caused prices to rise. For example, home owners may have once had a $500 to $1,000 deductible but now have a form of a deductible of 2 percent of the insured value of a home for items like wind and hail damage. That could mean that insurance may only cover half the cost of a roof replacement.

What’s more, more insurance companies are issuing more limits on what all they will pay for in replacing a home.

Texas home owners pay the highest insurance premiums in the country, but a consumer group in the state found that newer policies are covering less, like limiting coverage on plumbing leaks or damage to foundations.

With insurance policies squeezing more home owners’ budgets, housing experts say home owners need to take an active role in reviewing their policy to find out what all is covered. Also, they say that home owners need to think twice before making several claims.

“One large claim will affect you less than multiple small ones,” The Wall Street Journal article notes. “Of course, you buy insurance to be covered, so you are always free to file a claim. But you should know that insurers keep close track of claims and will penalize you for making too many, even if you just happen to hit a string of bad luck.”

Source: “Insurance Deductibles Soar,” The Wall Street Journal (July 13, 2012)

Natural disasters from tornados, hail, winds, and floods caused widespread damage throughout the country in 2011, and more home owners may soon see their homeowner's insurance premiums rise because of it.

The insurance industry has faced heavy losses in recent years from natural disaster, and insurers may be forced to raise costs of premiums, particularly in the Southeast and Midwest, Robert Hartwig, president of the Insurance Information Institute, warns.

"We've had record losses for four straight years," Hartwig told USA Today. "My sense is that premiums will probably rise 4 percent to 5 percent."

The average annual cost of homeowner's insurance in 2008 was $791 and increased to $807 in 2010, according to data by the Insurance Information Institute. Hartwig told USA Today that he predicts the average premium for 2011 will be about $840.

Source: “Home Insurance Rates Likely to Go Higher,” USA Today (Jan. 4, 2012)

An annual check-up on your homeowners insurance can result in a healthier policy and a healthier pocketbook.

It’s time for your annual check-up. The good news is that for this one, you won’t have to don one of those revealing hospital gowns—and you may walk away with a healthier pocketbook. We’re talking about a homeowners insurance check-up, a task you should complete once a year, ideally around renewal time. This will ensure your policy still provides the right level of coverage for your family, and your premium isn’t costing you more than it should.

Remember, homeowners insurance is essential. The coverage is designed to protect your home and its contents, as well as shield you from liability for accidents and such on your property. Block out an hour of your time, call an insurance agent, and get answers to these three important questions.

What type of coverage do I have?

The most effective type of coverage is known as “replacement cost,” which covers, up to your policy limits, what it would take today to rebuild your house and restore your belongings, says Jerry Oshinsky, a partner at Jenner & Block in Los Angeles who has represented homeowners in litigation against insurers.

“Extended” replacement cost coverage provides protection to your policy limit, say $500,000, and then perhaps another 20% of the cost after that. Percentages vary, but in this example you could recoup up to $600,000 on a $500,000 policy, assuming your losses reach that high. Extended coverage can compensate for any unanticipated expenses like spikes in construction costs between policy renewals. Now harder to find due to the industry shift toward extended replacement coverage, “full” or “guaranteed” replacement coverage covers an entire claim regardless of policy limits.

A less attractive alternative is “actual cash value” coverage that usually takes into account depreciation, the decrease in value due to age and wear. With this type of policy, the $2,000 flat-screen TV you bought two years ago will be worth hundreds of dollars less today in the eyes of your claims adjuster. Kevin Foley, an independent insurance broker in Milltown, N.J., favors replacement cost coverage unless you can save at least 25% on the premium for going with actual cash value coverage instead.

Even if you have replacement cost protection for your dwelling and personal property, don’t assume everything is covered. Structures other than your home on your property—such as a detached garage or swimming pool—require separate coverage. So too do luxury items like jewelry, watches, and furs if you want full replacement cost because reimbursement for those items is typically capped.

How much coverage do I really need?

OK, now that you’re clear on what type of policy you have, you need to figure out how much policy you truly require in dollar terms. Let’s say you purchased your home five years ago and insured it for $200,000. Today, it’s worth $225,000. Simply increasing your coverage to $225,000 may nonetheless leave you underinsured. Here’s why.

The key to determining how much dwelling coverage you need isn’t the value of your home but the money you’d have to pay to rebuild it from scratch, says Carlos Aguirre, an agent for Liberty Mutual Insurance in Arlington, Texas. Call your local contractors’ or homebuilders’ association and inquire about the average per-square-foot construction cost in your area. If it’s $150 and your home is 2,000 square feet, then you should be insured for $300,000.

There’s no rule of thumb for how much your homeowners insurance should cost. Insurers use numerous factors—age, education level, creditworthiness—to determine pricing, so the same policy could run you more than your neighbor. In recent years the average annual premium was $804. Oshinsky advises against scrimping on insurance because big increases in coverage probably cost less than you’d think. He recently purchased a liability policy that cost $250 for the first $1 million in coverage. Adding another $1 million increased his premiums only $12.50 more.

How can I lower my premiums?

The higher your deductible, the amount you pay out of pocket before coverage kicks in, the lower your premium. Landing on the appropriate deductible level requires remembering that insurance should cover major calamities, not minor incidents, says Foley, the independent insurance broker. Most homeowners should be able to absorb modest losses like a broken window pane or a hole in the drywall without filing claims. If you can, then you’re wasting money with a $250 deductible.

Foley’s rule: If you’re a first-time homeowner and don’t have a lot of savings, moving up to a $500 deductible will probably stretch your budget. However, if you live in a ritzy home and drive an expensive car, then you should be able to afford a $1,000 deductible. In Milltown, N.J., for example, the premium for a $200,000 home with a $500 deductible would be $736, according to Foley; moving up to a $1,000 deductible drops the annual premium to $672. That’s $64 in savings.

Every major insurer offers discounts to various groups, such as university employees or firefighters. Figure about 5%. Ask which affiliations would entitle you to a discount and how much. If an AARP membership would result in a $50 savings, pay the $16 dues and pocket the $36 difference. Many insurers also offer discounts ranging from 1% to 10% or more for installing protective devices like alarms and deadbolt locks, for going claim-free for an extended period, or for insuring both your car and your home with the same carrier.

G.M. Filisko is an attorney and award-winning writer who has been involved in insurance litigation. A frequent contributor to many national publications including Consumers Digest, Bankrate.com, REALTOR(R) Magazine, and the American Bar Association Journal, she specializes in real estate, personal finance, and legal topics.

Read more: http://www.houselogic.com/articles/homeowners-insurance-time-for-annual-check-up/#ixzz1Vln66sNJ

 House insurance policy is about safeguarding the greatest investment the majority of us are likely to make – not just the structure of the house by itself but everything we’ve put in it. Quite simply, you can find inevitably many facets to the include that efficiently protects this kind of an expense. It may be helpful, consequently, to appear at a few of the numerous elements of home insurance policy cover:Two-in-one – the basic creating blocks of house insurance policy include are the twin elements of buildings insurance and contents insurance policy. The very first appears after the actual fabric or structure of your home – the creating by itself – whilst the latter, fairly self-explanatorily, safeguards all of the contents of your house. Since most homeowners want each kinds of insurance policy, the products are frequently marketed as a single package, but can still be purchased separately, such as a tenant who wants contents insurance only.

Improve Your Insurance Score

Paying all of your bills on time is one good way to improve your insurance score—and, in turn, lower your homeowners insurance premiums.

Most people expect the cost of homeowners insurance to go up after a claim is filed. But it may surprise you to know that how good you are at managing your finances can have just as big an effect on your premium as the tree that fell on your house.

Insurers look to your credit history to calculate an insurance score that’s used to judge how much of a financial risk you are. The lower the score, the higher the risk—and the higher the premium you’ll likely pay on your homeowners insurance. Don’t despair. There are strategies, including paying bills on time, that can help improve your insurance score.

Good credit pays off

Wondering what too many credit cards has to do with the limb that landed on your roof? More than you’d think, it turns out. Several studies have found that your credit history is a good indicator of how often you’re likely to file an insurance claim. Because more claims translate into more expense for insurance companies, homeowners with low insurances scores tend to be charged higher premiums.

Insurers claim the use of credit-based insurance scores is fair and actually works in favor of fiscally responsible consumers. A 2006 study found that 53% of Oregon policyholders paid lower premiums on homeowners insurance thanks to credit-based insurance scores. ECONorthwest, the group that conducted the research, estimated the average annual savings for policyholders nationwide at $60.

How your insurance score is calculated

Your insurance score starts with your credit report, a history of your credit use. What credit cards and loans do you have? What are the balances? How promptly do you pay? Your report also includes information gleaned from public records such as bankruptcies and liens. FICO is the best-known company that turns the information in credit reports into credit scores. FICO credit scores range from 300 to 850.

Insurers are less concerned than lenders about your ability to pay back a specific amount than your overall ability to manage money, says Allstate spokesman Adam Shores, especially whether you make late payments and how long since delinquencies took place. Your insurance claims history, as recorded in your CLUE report, also affects your insurance score. So can your age, the construction of your house, and whether you’ve installed smoke detectors and other safety equipment.

All of these data are crunched to come up with a numerical insurance score. This is where it gets tricky for homeowners. There isn’t a single source for insurance scores, and your insurer probably won’t tell you your score even if you ask. Some insurers employ proprietary formulas. Others use insurance scores calculated by companies like FICO and ChoicePoint, the latter of which will sell you your score for $12.95. ChoicePoint’s Attract insurance scores can range from 200 to 997, with a score over 776 considered good.

Ways to raise your score

The most effective way to raise your insurance score is to improve your credit score. You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion. Order them and look for errors: Is your Social Security number correct? Are all the debts and credit cards yours? Do the balances jibe with your records? Errors can be disputed online.

If the information on your credit report is correct, there are still things you can do to improve your score. Paring down balances on credit cards is a big plus. Paying bills by the due date is another major factor, accounting for 35% of a FICO credit score. Time is also on your side. Most late payments are removed from your credit report after seven years. A few major problems such as a bankruptcy may stay on for a decade or more.

Mariwyn Evans has spent 25 years writing about commercial and residential real estate. She’s the author of several books, including “Opportunities in Real Estate Careers,” as well as too many magazine articles to count.

Source: http://www.houselogic.com/articles/improve-your-insurance-score/

A tree falls on the roof of your house. You file an insurance claim with your agent, collect a settlement from the insurer, and fix your roof. End of story, right? Not quite. Every claim you make on your homeowners insurance is recorded in a widely used insurance industry database called CLUE, short for Comprehensive Loss Underwriting Exchange.

Almost all insurance companies use CLUE to check on the claims history of prospective policyholders. The CLUE insurance report also includes claims made on your home before you even bought it. A-PLUS is another company that maintains a loss-history database. What’s inside these reports can affect your insurance premiums, or even prevent you from getting coverage.

Your claims history lives on in CLUE

The CLUE Personal Property report, which pertains to homeowners insurance, is divided into two parts: your personal record of claims (“Claims for the Subject”) and the claims on your home (“Claims History for Risk”). The number of claims in either section will affect whether you can get insurance for your home, how much coverage you can get, and how much you’ll pay in premiums. If you’re turned down for homeowners insurance because of information in your CLUE report, your insurance company is required to let you know why you were rejected.

Since the database is used by most insurance companies, your claims history follows you from one insurer to another. Actual claims, as opposed to inquiries, remain in the CLUE database for seven years from the date you filed them. Both ChoicePoint, the owner of CLUE, and A-PLUS advise insurance carriers not to report loss information just because you called to ask a question about whether your policy will cover a particular loss. Individual insurance companies may keep a record of inquires, though.

How insurers use CLUE

Insurance companies rely on CLUE reports because statistics show that if you’ve filed a claim in the past, you’re more likely to file one in the future, says Dick Luedke, a spokesperson for State Farm Insurance. The amount of a claim is less important than how often you’ve filed, he says. “We aren’t trying to make up for past losses, but to predict the risk of future claims.”

Each insurance company has its own formula for calculating how much a claim will affect your premium, according to the Insurance Information Institute, a trade group that provides information to consumers. Suffice it to say the fewer the claims the less you’ll likely be charged. State Farm gives a 5% discount if you haven’t filed a claim in the last five years, says Luedke. That’s $40 off an average annual premium of $804. Ask your agent if a claim-free discount is available.

Claims aren’t all that count

Knowing what’s on your CLUE report will give you a sense of whether you’ll need to pay extra for homeowners insurance, or even if you run the risk of rejection. Unfortunately, even a pristine report doesn’t mean you can be sure of getting homeowners insurance at a great price. That’s because the claims on your CLUE report aren’t the only things that affect your overall insurance risk.

Insurance companies also consider your credit score, which is based on such things as how much debt you carry, whether you pay your bills on time, and so forth. According to the Insurance Information Institute, studies show that how people manage their finances is a good indicator of whether they’ll file an insurance claim. The more likely you are to file a claim, the bigger risk you are to the insurance company. And more risk means a higher premium or denial of coverage. Other factors insurers consider include the location of your home and its type of construction.

How to review your CLUE report

If you do decide to check you CLUE Personal Property report, it’s a relatively easy process. Under federal law, you get one free CLUE report a year. You can contact ChoicePoint by telephone at 800-456-6004. You can also register online to gain access to an electronic copy of your report for 30 days. Request a form to receive a Property Loss report from A-PLUS by calling 800-709-8842. There’s a charge of $9 to have the report mailed to you, according to the company’s website.

Your CLUE report will have:

•Your name, home address, birth date, and Social Security number;

•The number assigned to the report;

•The name of your insurance company;

•The type and number of the insurance policy;

•The type of loss—fire, water, etc.—for each claim and the claim number;

•The date of the loss and the amount of each claim;

•The status of each claim: closed, pending, etc.

The report also tells you how to dispute any errors you find. Because risk calculations vary by insurance company, it’s impossible to say exactly how a claim on your CLUE report will affect your premium. That makes it tough to decide just how much value checking your CLUE yields. Still, taking less than an hour once a year to order and review your report could pay off, especially if you find an error.

Mariwyn Evans has spent 25 years writing about commercial and residential real estate. She’s the author of several books, including “Opportunities in Real Estate Careers,” as well as too many magazine articles to count.

Source: http://www.houselogic.com/articles/your-clue-insurance-report-matters/