subject: Is Home Insurance Changing? [print this page] Is Home Insurance Changing?
The insurance industry is based on the latest facts and figures. It doesn't stand still for long and policies are always dictated by the laws and associated changes. Values changes, new properties are built and new factors are integrated into policies annually. Therefore the only inevitability is that home insurance will always change.
In recent years the cost of housing has fluctuated markedly. Invariably this has an influence on the cost of the average insurance company. Equally, people are buying more gadgets and expensive furniture, which means that the value of content within homes is increasing. New housing estates are always being developed and regeneration is happing throughout the country; inevitably this has to have a knock on effect in the pricing of insurance.
To explain why, we need to take a step back and look at the way in which home insurance is calculated in the first instance. Essentially it is based on a number of determining factors. These can be anything from the value of a home to the amount of crime in the immediate area. When these figures change, so too do the quotes.
One thing that can cause a major change in price is a natural disaster and the resulting consequences. For instance, an area may not have flooded in centuries and therefore be deemed safe by the insurers. However, if it were to flood as a consequence of freak weather, there would be significant payouts by the providers and a massive increase in the premiums of all those affected homes. It is unfortunate, but insurance companies have to reflect the relative risk factor in any situation.
Coastal erosion, scrub fires, tornadoes, in fact pretty much any event that could result in a claim or that has a reasonable chance of repeating or occurring within the foreseeable future can hike costs. This isn't accidental and certainly isn't there to punish homeowners, it's just a case of home insurance having to change in step with the related circumstances.
The security of a home is also something that can have an impact on how much you pay, particularly for your contents cover. Again, the home security industry isn't standing still. There are always new alarms, locks and innovations elsewhere. As standards increase, so too does the expectancy of insurers. Older systems may be deemed as higher risk, while the newer versions provide added security and help reduce risk.
If changes such as these weren't accounted for, the home insurance industry would have no basis for comparison where properties were concerned. More likely than not it would have to be assumed that most places were a high risk and, even if major alterations were made, there would be no way for homeowners to get a better deal.
By tracking claims, risks and changes in legislation, insurance firms can be a little more even handed in the way that consumers are charged. A road which was notorious for burglaries decades ago isn't necessarily the same today. Assuming that it was would mean that residents end up paying more without the chance to reduce premiums in future years. This is why change not only happens, but is in fact absolutely essential for the home insurance industry.
Change can help provide better value and increased coverage for the problems that are most likely to afflict your property. It shouldn't be seen as a negative, in fact quite the opposite. Of course it is unfortunate if your home is flooded and then you have a hike in policy for the rest of your time in that property, but that's how risk is calculated. And it is this risk that is in constant flux, affecting prices for homeowners throughout the country.
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