Why Did My Home Owner’s Insurance Go Up?

Homeowner’s insurance provides coverage for your house and contents. In states like Texas, homeowner’s coverage starts high and goes higher. Texas had the highest homeowner’s insurance in the nation in 2010, according to Shawn Nordstrom in a November 2010 article at Live Insurance News. States regulate homeowner’s insurance, approving the policy language and rates. One solution to rate increases suggested by Forbes.com and similar money-management websites is to shop around for your homeowner’s coverage. High price does not necessarily give you better insurance.

Type of Policy

Homeowner’s insurance comes in three basic types. HO-1 is too basic, and some states and companies no longer use the form. It covers 11 items or perils and no others. HO-2 includes the 11 basic perils and 6 more for a total of 17 perils. HO-3 provides better coverage for the home and contents and is more expensive than the HO-2. HO-3 covers 17 perils and any others it does not specifically exclude. Exclusions might include flood, earthquake, war and nuclear accident. Some states use variants of these numbers, with form policies approved by the state insurance commission. The more inclusive the policy, the more it costs.

Risk Factors

Your homeowner’s policy costs will go up based on certain risk factors. Premium calculations are based on location, sometimes down to the county or city, and the distance from a fire hydrant. So, if those risk factors changed in the past year, you could see a premium hike. The Federal Trade Commission reports that auto and homeowner’s insurers use credit scores for determining insurance costs too, because better credit scores represent more stability and less risk, according to Realtor.com. If your credit scores have decreased, your homeowner’s insurance premium may increase.