 | Shon Chapman
has been offering quality insurance coverage for over four years. After receiving his Bachelor of Science in Sociology from Kansas State, Shon moved to Wichita and worked as a private investigator before entering the insurance industry. Shon enjoys playing golf and spending time with his wife and two children, Andrew and Caroline. He is currently an agent with American Family Insurance, offering multi-line coverage including Life, Home/Renters, Auto, and Commercial insurance. Shon holds licenses in all of these coverages for the states of Kansas and Missouri, with his primary office located in Wichita. You may contact him at (316) 721-3800 or by e-mail at schapman@amfam.com |
Insurance
2004-09-01 11:07:00
Why homeowner rate increases?
: Why are my homeowner rates continuing to increase, even though I haven't filed any claims?
ANSWER: To answer this question, a person has to understand how insurance works. The cost of claims is shared among all policyholders. This makes each individual's premium relatively small. Today, the average homeowners insurance premium is $487.00 while an average homeowners claim is around $3,000.00 - six times the cost of the premium. Remember, no homeowner pays for his or her own experience. You're helping to pay for those policyholders who file claims. The majority of premium (over 70%) is used to pay claims while the other 30% is used for operational costs including selling, servicing, and issuing the polices. Less than 1% of all premium is left to establish an emergency fund for unforeseen storms and disasters. And while you may believe your insurance company is over charging you, the fact of the matter is that the overwhelming majority of companies have actually lost money on property insurance over the last ten years. When you combine all of that with the fact that home repair costs are increasing at a rate of over 7% per year, it is easy to see why and how your rates continue to climb. Talk with your agent to see if there are viable ways for you to reduce your premiums. It may be a good idea to consider a higher deductible in order to lower your premium. Just remember that you will have higher out of pocket expenses in the event of a loss. Also, make sure that you are getting all the discounts available from your company, including alarm discounts, multi-line discounts, or new home discounts. Finally, keep up the maintenance on your home. Remember, that your insurance policy is for emergencies - it is not a maintenance program!! If we all work to prevent as many losses as possible, (including remembering to safeguard against theft) we can keep costs and premiums lower.
