If you’re a homeowner, chances are your house is worth less than it was five years ago. But you could still be paying more to insure it.
Despite the deep housing bust of the last few years, the cost of rebuilding a damaged home — in other words, what you pay insurance for — has not changed much, according to industry experts.
That means that unless you have reduced coverage or increased your deductible, chances are you are paying as much or more to insure your home as before the housing bust.
“The price of homeowners’ insurance is based on the cost to repair or rebuild your home. The price of a home is based on the market value of that home and the land upon which it sits,” said Robert Hartwig, president of the Insurance Information Institute.
Although the recession has been particularly brutal for the construction industry, Hartwig said that hasn’t necessarily meant the overall cost of labor and materials needed to rebuild a home has gone down.
After rising nearly 62 percent between 2000 and 2007, the average premium for homeowners insurance did dip by nearly 4 percent in 2008, to $791, according to the most recent data available from the National Association of Insurance Commissioners.
But Hartwig said that dip was not due to a drop in the cost to insure a home. Instead, he said many homeowners did things like increase their minimum deductible or drop extra coverage options in order to save a little bit of money on their premium.
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3 comments:
My insurance company raised my homeowner rates telling me I lived in a precarious area. I asked when was the last time a major catastrophic storm hit Maryland? After digging into it I was told the reason most policies are not going down and most are even going up is because the insurance companies lost of ton of money in the stock market and they have to make it back some how!
Corrupt! , like I said. We the people are being gouged to death!
We just received our new tax assessment and, to our surprise, the value went down by $40,000! (Our home is in excellent condition even had the addition of a new room.) I guess this says it all about the real estate values of existing homes. Our taxes should go down, but I'm sure the insurance will stay the same or increase.
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