Earthquake Coverage Homeowners Insurance Maine

More claims send home insurance cost up

Some home insurance policy holders, in turn, find themselves being hit with higher insurance rates.

One Tulsa World reader noted how his homeowners insurance was increasing from $856 to $1,501 a year due to the rise in nationwide disasters, as his insurance company explained to him.

While there is no way to quantify what percentage homeowners' insurance has increased or will increase, rates in Oklahoma have been rising to some degree for a while because of the number of severe storms, said Glenn Craven, communications officer with the Oklahoma Insurance Department.

"Every company is going to base its rate ... on its experience. Some may suffer significant losses from a storm because they have homes in that location, and other companies suffer less in the way of losses," Craven said.

Companies adjust their rates periodically over time, Craven said, and depending on their experience, some do it suddenly and others more subtly.

"Oklahoma has been ravaged by severe weather, wildfires and just about every weather-related disaster known to man, and that comes into play along with a lot of other factors when companies begin to establish their rates," said Jerry Johns, president of the Southwestern Insurance Information Service, a trade group that serves 85 percent of home insurers in Oklahoma and Texas.

Industry data show claimed losses on state home-owners policies more than quintupled from 2005 to 2010, according to a previous Tulsa World report.

Homeowner claims in Oklahoma surpassed $1 billion in 2008 and last year totaled more than $1.6 billion. That compares with $319.2 million in homeowner claims that Oklahoma insurers paid out in 2005 while collecting $804.1 million in premiums, based on statistics from the National Association of Insurance Commissioners.

"The last four years have really pointed out to us and the industry just how bad a bad year can be when it comes to wind and tornado activity.

5 Things to Know About Homeowner's Insurance | | Century 21 ...

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately.

2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3. Know the replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

4. Know the actual cash value. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

5. Know the liability. Generally your homeowner’s insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

Reprinted from REALTOR® magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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