Homeowners using escrow accounts may see their mortgage payments rise each year due to the insurance agency’s annual policy re-evaluation. Several factors can trigger these increases, some of which the homeowner can control. Here’s a look at situations that cause your homeowner’s insurance costs in Bristol, CT, to increase annually.
Property Changes
Any work you do to upgrade your home can impact your home insurance rates. For example, when you add a new swimming pool, you may see your monthly insurance premiums rise because you’re adding risks of people getting injured. A swimming pool requires regular care to maintain safe and clean conditions. Neglecting this responsibility can cause illness to spread in your household and neighborhood. Also, adding swimming pools also create additional risks of people drowning.
However, specific home improvement projects can lower the cost of your homeowner’s insurance in Bristol, CT. For example, installing a security alarm system or video surveillance cameras in your home will lower risks, which reduces monthly premiums. Anything that lowers risks of injuries, theft, or property damage, such as fire sprinklers, can potentially lower your insurance rates. It also depends on your insurer and the type of coverage.
Credit Score
Everyone has a credit score that reflects what creditors view as their ability to repay a loan on time. Low scores typically equate with money management issues such as debt or late payments, leading to difficulty getting a loan. As a result, mortgage lenders usually do not issue home loans to people with poor credit. You need a passing credit score that fits the lender’s criteria to win their trust.
Credit scores constantly fluctuate, so just because you have a good credit score this year doesn’t mean the score will be consistent next year. However, maintaining a good score signals reliability to the insurer. If your credit score sinks a significant amount, your insurer may raise your monthly premium. Conversely, your insurer may reduce your premium if your credit score starts to escalate.
Claims
The number of claims you file can contribute to an increase in your monthly insurance rates. This is because insurers take on customers they consider the low risk for big payouts. Anyone can file at least one home insurance claim at some point. However, once a noticeable pattern of multiple claims develops, the insurer may begin to view the customer as high risk and raise premiums. Therefore, it’s best to only file claims when necessary and not manipulate the system for maximum returns.
Inflation
Periods of high inflation on a macroeconomic level force many businesses to escalate their prices. Insurance agencies are especially vulnerable in times of inflation because higher costs often mean higher payouts. Consequently, insurers may increase rates to try to maintain profit margins. Insurance agencies use the Consumer Price Index (CPI) to measure inflation. When you notice CPI rising at a steady rate, you will likely also see your monthly premiums rise with it as well.
Homeowners cannot expect their insurance rates to stay the same always. While homeowners can take steps to lower their rates, engaging in higher risks usually pushes premiums up. Then there are scenarios people can’t control that may lead to increased rates. Talk with our insurance experts at C.V. Mason Insurance Agency about your specific coverage needs so we can assist you in getting customized homeowners insurance.
