Costs are continuing to go up on nearly everything, including NH Homeowner's Insurance. Here is an explanation as to why and what you can do about it.
Why is my NH Homeowner's Insurance Premium Increasing?
Insurance premiums are increasing not only for NH homeowners but across all types of insurance and nearly everyone across the country.
Like any person or business that has to purchase anything, costs have gone up significantly over the last year or two due to inflation. As insurance essentially covers the expenses of buying things (such as lumber, household appliances, labor, etc.), insurance companies are paying more for such items.
This is exacerbated by the impact inflation has had on building materials. According to the US Bureau of Labor and Statistics, plywood has increased by 88%, PVC pipes by 45%, and lumber by some 41%. If it costs more to rebuild a home, the insurance companies will charge more premiums.
Why did my Dwelling Coverage Increase on My NH Homeowner's Insurance?
Most home insurance policies include an inflation guard. This protects the homeowner as the dwelling coverage increases a certain percentage every year to "guard" against inflation. The inflation guard has been around 2 to 6% in the past, depending on the carrier.
As inflation began increasing, it was clear that a 2-6% inflation guard would not be enough to keep pace with the current inflation rate. As a result, many carriers changed the standard inflation guard rate upwards of 8 to 10% to try to have a more accurate coverage limit. It should not be a surprise that with more coverage comes more premiums.
What If I Feel the Inflation Guard is too High and I Want to Lower my Coverage?
Insurance companies often operate by generalizing information. You know your home best, so if you feel over-insured, speak with your agent. They can likely help you find the appropriate amount of coverage using an estimated replacement cost software carriers provide to agents. That said, if the software estimates the replacement cost of your home more than you expect, it may be challenging to argue with the carrier without hard proof just because you don't want to pay more money.
What Happens If I Switch Companies for My NH Homeowner's Insurance?
Whether you decide to ask your agent to find you a different company or you shop on your own, there is not likely an insurance company in NH that is not feeling the financial impact inflation has had on its bottom line.
If you couple inflation along with the increase in claims frequency and severity, the insurance industry is in what is called a hard market. This means that premiums are higher and there is a reduced willingness to write business.
What this means for consumers is that it may be a risk to jump carriers because companies are getting much more strict on underwriting. What you may perceive as a well-kept home, may not be in the eyes of the insurance company and you may risk getting your policy canceled.
We have seen the frequency of this increasing for our own clients, as companies are using satellite images and drones to "inspect" properties, along with the traditional on-site inspectors. If you have a missing shingle, railing, or some signs of dry rot, you may find it challenging to find a new company to insure your home, which will likely cost you even more.
What Can NH Residents Do to Decrease their Insurance Premium?
The best thing to do is talk with an independent insurance agent. Independent agents represent many insurance companies and not just one (like State Farm, or Liberty Mutual, who can only offer their company's products.)
An independent agency, like HPM Insurance, can review your policy information to find ways to save money by perhaps bundling your home and auto with the same company, increasing your deductible, or reviewing policy discounts.
No insurance professional likes a hard market. It is stressful for clients, agents, and company partners, but together, an agent can help you navigate the storm.