Why Did My Homeowner’s Insurance Go Up?

Texas HomeHomeowner’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 2011. States regulate homeowner’s insurance, approving the policy language and rates. One solution to rate increases is to shop around for your homeowner’s insurance. High price does not necessarily give you better insurance.

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 ans is more expensive than the H0-2. HO-3 covers 17 perils and any others it does not specically exclude. Exclusions might include flood, earthquake, war and nuclear accident.

Your homeowner’s policy costs will go up based on certain 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. If your credit scores have decreased, your homeowner’s insurance premium may increase.

Most polices increase the policy limits based on inflation rates. Your premium cost goes up each year, but so do your coverage limits. If you have a replacement cost insurance policy instead of actual cash value, premiums will increase with the cost of construction materials. Actual cash value considers depreciation and age of the home and contents; replacement cost considers only the cost of replacing the item in today’s market.

C.L.U.E. -The Comprehensive Loss Underwriting Exchange database retains records of information about any claims you make . Homeowner’s insurers use C.L.U.E. reports for your history to evaluate your likeihood of making a claim. If you have made a claim in the last seven years, C.L.U.E. has it in the database and the insurer rates your policy premium based on the report. A recent claim will cause your homeowner’s insurance to increase.

Photo: Licensed from iStockPhoto | Source: John Wendell, Risk Guru

About Tom Branch

Tom Branch has written 597 posts in this blog.


Have you ever just met someone, but felt you like you'd known him for years? That's what most people experience with Tom. He has a knack for making folks feel right at home. After 21 years in the Air Force, loyalty and honesty are the foundation of everything Tom does. In addition to being a Texas Real Estate Broker, Tom is a Certified Distressed Property Expert (CDPE) and a Short Sales & Foreclosure Resource (SFR).

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