Home Insurance Rates Rise Even as Property Values Sink

homeowners insuranceIn a year that's been rife with tornadoes and severe thunderstorms, premiums for homeowners insurance are on the rise. And forecasts are calling for a hurricane season that will be more active than usual. Insurers may try to boost rates by as much as 20 percent in areas where storms hit hardest.

Don't look for a break because the value of your home has fallen. Premiums are tied to the cost of rebuilding a home -- not its current market value -- so skimping on coverage because your home's value has shrunk could leave you underinsured. It doesn't help that rebuilding costs have been increasing: As of late spring, the overall producer price index for construction materials was up 7.5 percent for the previous 12 months.
Some key moves could help you save on home insurance, says Michael Barry, spokesman for the Insurance Information Institute. One is to raise your deductible, provided that you can pay more out of pocket if disaster strikes. You can save up to 25 percent by hiking a deductible from $500 to $1,000.

If your auto insurance and homeowners policies are with different companies, see how much you could save by having a single insurer. Get several quotes, but don't buy based on price alone -- look for a solid reputation and a below-average complaint ratio (find complaint info at eapps.naic.org/cis).

Don't be shy about asking for discounts. You may be able to save at least 5 percent if you have installed smoke detectors and security devices in your home, or you have recently updated your plumbing or electrical systems. Retirees may also be eligible for discounts.

More from Kiplinger:
QUIZ: Are You Covered?
5 Things You Need to Know About Homeowner Insurance
TOOL: Is Your Home Fully Protected?
10 Reasons Your Insurance May Need a Checkup

See also:
Home Insurance: Know What You're Buying
Tag Your Home Photos for Better Insurance Coverage

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