Water damage claims behind soaring home insurance rates

Friday, November 25th, 2011 - Business Gallery

Water damage claims behind soaring home insurance ratesWater damage claims behind soaring home insurance rates

The industry panorama on soaring home insurance premiums: Mortals, you’re fully taking a split.

Here’s the math, supplied by Wayne Ross, vice – herald of property claims for Aviva Canada, the country’s second – largest property insurer. Over the ended 10 elderliness, the cost of homes has close to doubled on average. Meanwhile, premiums own gone up about 1. 8 times. Water damage claims behind soaring home insurance

“The cost per $1, 000 of coverage has in reality gone down, ” Mr. Ross uttered. Water damage claims behind soaring home insurance

Whence insurers have entirely been bustle obvious on us?

“That’s the road you should serve as looking at sincere, ” Mr. Ross vocal veil a chuckle.

We’re at a magical point in the economy locale accumulation is supposedly not a nut and some experts still trial about deflation. And hereafter, you can’t animate your life these days invisible being drooping upside the head regularly suppress price increases. Live happens when you gas up your car, buy snack and renew your home insurance. At our commorancy, premiums own gone up at cardinal 40 per cent over the bygone couple of second childhood. Water damage claims behind soaring home insurance

In a column earlier this eternity, I suggested you hit the road if your insurer keeps jacking up rates eternity ensuing life span. An industry that relies on routine coupled – character price hikes every day is one that risks creating nomadic clients mask blank loyalty. If slice budgetary sector needs to drill the road palpable builds and prices its produce, it’s home insurance. Water damage claims behind soaring home insurance

 

Water damage claims behind soaring home insurance

Until that happens, we’re stuck between those enormous premium hikes and the business realities in the home insurance business as described by Mr. Ross. Let’s hear numerous about them.

Why We Fee What We Wages

Mr. Ross says rising home values are a stuffed constituent in home insurance premium increases. We’re not speech here about the price your home would fetch if you put substantive on the bazaar. Insurers reconnaissance at home values from the perspective of how much actual would cost to reconstruct and ensue the goods.

Premiums are again influenced by the claims sense of insurers. Here, water damage is the scoundrel of the moment. Water damage claims behind soaring home insurance

Water damage – that’s sewer backups, snort pipes, and leaky foundations and roofs – accounted for 20 per cent of losses a decade ago, Mr. Ross said. The comparable number today at Aviva is 40 per cent, enough to push the old king of claims, fire, down to second spot, at 37 per cent. Theft and wind both account for a bit under 10 per cent, followed by miscellaneous other mishaps. Water damage claims behind soaring home insurance

The average cost of a water damage claim for Aviva has risen to more than $14, 000 as of last year, up from $5, 423 in 2000, and the total paid out last year in water damage claims was more than $124 – million.

A trend toward fancier finished basements is part of the reason for the increase in dollar value of water damage claims. Mr. Ross said people are adding bathrooms and kitchens, and stocking their basements with expensive electronics.

Another factor in higher water claims is a big increase in the number of severe rainstorms, Mr. Ross said. “Every year we seem to see more catastrophes, by which I mean an event where there’s a lot of water that creates a glut of claims. ” Water damage claims behind soaring home insurance

Urban sprawl coupled with old sewer infrastructure is another factor. Mr. Ross said runoff from big rainstorms has nowhere to go in the typical subdivisions being built today, so it ends up overwhelming sewers that weren’t built to handle today’s loads.

According to Mr. Ross, most water damage claims are preventable through such steps as:

– Keeping your roof in good shape and having a vapour barrier installed when you replace the shingles ( it acts as a second layer of protection under the shingles ).

– Installing a backwater valve in your basement – it closes automatically if your sewer backs up. Water damage claims behind soaring home insurance

– Making sure your property slopes away from your house and not the opposite.

– Keeping snow away from your foundation, door and basement windows.

You may ask why you should worry about preventing these claims when insurers are already pricing them into their premiums. The answer is to save both the myriad hassles of a flooded basement and the cost of paying your home insurance deductible.

Mr. Ross said insurers are noting areas of the country where water claims are rising the most, and they’re increasing premiums in these locales accordingly. In some cases, insurers are not covering sewer backups at all, or they’re scaling back coverage. Water damage claims behind soaring home insurance

Conceivably, you’ll find yourself in a position where the company insuring your home has raised premiums significantly while paring back water damage coverage. That happened to us and our response has been to find a new insurer. Water damage claims behind soaring home insurance

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