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By Jonathan Kurdell

In recent years many homeowners have seen sharp increases in their premiums. Understanding why can provide some peace of mind, and may also encourage working with your agent for a better deal.

The two main reasons for increases: Construction Cost Inflation and Weather.

Construction Cost Inflation: Most of your premium is based on the approximate cost of repairing or rebuilding your home (Section 1, Coverage A Dwelling on your policy). The costs of skilled labor and building materials tend to gradually rise, pushing premiums up by 2% to 5% each year.

Weather: The weather factor is more of a wild card. A few severe storms, or a single blizzard or hurricane, can make an insurance company pay far more claims than expected. Last year most insurers in Connecticut suffered huge losses due to Hurricane Irene and the freak October snow storm. Companies tend to respond by raising premiums or by no longer issuing new policies in certain regions or states. For instance, Allstate has stopped issuing new homeowner’s policies in Connecticut. And most companies won’t insure properties located within half a mile of the coast.

So what can you do to get your rates down?

  1. If you don’t have your home and auto insured with the same company, find out how much you could save by combining them. Companies have more success retaining clients with whom they have multiple lines of insurance. Bundling is the latest trend in the insurance industry, and companies are giving large discounts on home policies as well as more modest discounts on auto coverage when you combine them.
  1. Make sure that your policy is accurately rated. Let the company know if you’ve installed an alarm system or qualified for some other discount that wasn’t previously applicable. Recent renovations to your plumbing, wiring, heating or roof can also lead to discounts. And if your policy was issued at a time when you had bruised credit, ask them to re-run your credit score.
  1. If your deductible is under a thousand dollars, consider raising it. It will lower your premium. And since claims lead to premium increases, filing small claims is usually not worthwhile.

To make sure that you’re properly covered, always let the company know when you’ve made renovations, such as granite counter tops or a new bedroom or bathroom. And consider a home and auto umbrella policy, especially if you have large liquid assets or a young driver in the house. It’s better to pay a little more in premium than to have your coverage come up short when you need it.

Remember: the best way to keep your discounts and coverages up to date is to go over them with your agent at least once a year.