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EnCompass®
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January | February 2004
Volume 78 Issue 1
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AAA Insurance & Financial Services
AAA offers tips on how to
save on homeowners insurance
Own a home in Colorado? Get ready—your homeowners insurance will likely go up again in 2004.
"The average cost of homeowners insurance has increased about 10 percent a year during the past two years," says Carole Walker, executive director of the Rocky Mountain Insurance Information Association. "We may see a similar increase in 2004."
With the average annual cost of homeowners insurance in Colorado at approximately $560 in 2001, that would put the average cost near $739 in 2004.
Why costs keep rising
Others in the industry appear to agree that a similar increase may occur in 2004, and the reasons are many:
- Rising construction costs
- New homes are larger, on average
- Housing upgrades and additions
- Rise in catastrophe-related claims in recent years
Walker also explains that in the late 1990s, buoyed by strong profits in auto insurance and investment income from financial markets, insurance companies were able to keep homeowner premiums down. The result, explains Walker, was that homeowners insurance in Colorado was under-priced for several years.
How to save on premiums
Premiums for homeowners insurance vary widely from company to company and depend on a number of factors, including: location, age and type of building, local fire protection, deductible, available discounts and scope and amount of insurance. Here are a few suggestions about how to lower your premiums:
- Compare — It pays to shop around, but keep in mind the cheapest policy is not necessarily the best. Proper coverage, financial stability and good customer service are critical.
- Check into multiple policy discounts — Some insurers offer discounts to policyholders for carrying more than one type of policy.
- Raise your deductible — Determine how much of the loss you can afford to bear if you need to make a claim.
- Resist making small claims — Using homeowners insurance to recover costs related to maintenance will likely result in higher premiums.
- Ask about discounts — Some insurers offer premium discounts for safety and security devices such as smoke and burglar alarms, carbon dioxide detectors, deadbolt locks, fire extinguishers and fire alarms that alert local police and fire stations.
Many homeowners forget to put together an inventory of items that are in the home before fire, wind or other disaster, says Joe Lesher, CPCU, ARM, vice president of insurance services for AAA Colorado. Lesher suggests using a digital camera, as it is fast, easy and generally has a date which indicates when the items were present. Be sure to store the list, disk or videotape in a safe place away from your home.
Most importantly, homeowners should review their policy, know and understand the coverage, and contact their insurance agent or company if there are questions.
What's ahead for 2005?
Lesher thinks the sharp increases that Colorado homeowners will have experienced in the period
from 2002-2004 may moderate
in 2005.
"My sense is, barring major catastrophes or new issues, pricing may begin to stabilize in late 2004," says Lesher.
Nevertheless, he adds, "review your policy and do what you can now to control your costs."
What is typically covered by homeowners insurance?
When you insure your home, you receive coverage for your property (within policy limits) and legal liability.
Property — The typical homeowners policy may cover damage to your property (structures and contents, such as personal belongings) resulting from fire, windstorm, hail, water damage (excluding flooding), riots and explosion as well as other causes of loss, such as theft. Plus, the additional cost of living elsewhere while the structure is being repaired or rebuilt.
Liability — The typical homeowners policy may also provide coverage for "insureds" (as defined by your policy) for damages to other people or their property, inside, outside and even away from your house. |
AAA Connection
As an independent insurance agency, AAA
can shop around for you. AAA Insurance offers products from several highly rated national insurers including Safeco, Travelers, Progressive, Hartford, Allied, AAA Life, John Hancock and others. Products available through AAA Insurance include auto, home, life, umbrella, and long-term care.
For more information about homeowners insurance or AAA Insurance products, call
AAA Colorado toll-free at 866-399-9836.
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