Home insurance isn’t something that’s optional; if you are a homeowner then you must have home insurance.
It can be an expensive thing to pay but it’s imperative to ensure that your home is fully protected should anything go wrong or if any unexpected incidents or accidents occur.
There are many different types of policies and providers when it comes to home insurance, as well as varying things that it covers you for, including:
- Fixtures and fittings
- Water leaks and burst pipes
- Theft and burglary
- Property damage
- Third party liability
Below, you can find a list of reasons why your home insurance policy increases every year. Of course, it’s not ideal for you to have to pay more money every year to protect your home, but if it means that your house and all your belongings are fully covered then it should give you some peace of mind.
Inflation is the measure of the rate at which the average price of a basket of goods increases over a certain period of time. It’s also an important contributing factor as to why the price of home insurance increases every year.
When inflation goes up, so does the cost of your home insurance. Insurance companies have to put up their insurance prices so that they can keep up with the rising costs.
Also, an insurance provider is likely to have increased business costs year on year alongside inflation, so you may also see your home insurance going up due to this.
If you decide to add an indoor swimming pool or add an extension to the side of your home, then your home insurance is likely to increase somewhat every year.
This is so that your insurance provider knows to cover the added features of your property; the more valuable your home is, the more expensive the cost of your home insurance will be.
This may seem fairly obvious, but many people don’t actually realise that if they make a claim, then their home insurance policy will increase.
While filing one claim may not make too much of an impact on your insurance premium, if you file for a claim more than once over a three year period then your home insurance premium cost is likely to increase quite significantly.
This is because you’ll be perceived to be a higher risk client, so your home insurance provider will want to ensure that you’re fully covered in case you make another claim at a high cost.
Many insurance companies take a look at your credit score and rating to determine the cost of your home insurance and premium. Therefore, if your credit rating decreases due to poor credit management or other factors, then your home insurance is likely to increase.
Home insurance companies use your credit rating to determine whether you’re likely to pay your premium on time. A low credit rating may suggest to them that you’re not entirely reliable, so they may increase the cost so that they have more leverage over you to pay it.
When it comes to the price of your home insurance increasing, there’s not always a lot you can do, especially with regards to inflation.
However, there are some ways to help to reduce your home insurance price again, or to prevent it from increasing even further. Here are some ideas on what to do when your home insurance increases.
Don’t just leave the company straight away
While you may be tempted to leave your home insurance provider straight away if you’re not happy with them for increasing the price of your premium, you must try and remember that there’s a legitimate reason for them increasing it.
Don’t just leave your current company straight away just because you’re not initially happy; you may find it to actually be beneficial to stick with your company for the long haul because longevity and loyalty with a company often sees you reaping many rewards.
Search around for better rates
If you do decide that your current provider is charging you too much, and you do decide you want to leave, don’t just make a rash decision. Make sure you search around for the best alternatives first so that you can rest-assured that you’ll be moving to another company with better rates and premiums.
Improve your credit score
Of course, it’s not quite as simple as just saying that you need to improve your credit score but there are a few measures you can take in order to try and improve your credit score.
Don’t have too many credit accounts open and make sure to always pay your bills on time; these will help to improve your rating over time.
It’s incredibly frustrating when your home insurance increases every single year; especially because the price you’re paying will already be high.
However, in a lot of instances, there isn’t really much you can do, but you can try and help to reduce it back down by improving the likes of your credit score.