It’s Getting Costlier to Insure a Home

Some of the nation’s largest insurers are raising
home insurance premium rates, or plan to soon, reports The Wall Street
Journal.

For example, State Farm Mutual
Automobile Insurance Co. says it increased home owner rates, on average, 7.3
percent, and in some states it raised rates even more. Other insurance companies
also report higher rates–a company in Florida reports an 11 percent increase
this year in premium rates and in Pennsylvania some areas have faced a 33
percent hike in rates.

So why are rates
rising when many home owners are seeing their housing values dropping?

Experts say premiums are partially based
on rebuilding costs, not a home’s appraised market value, The Wall Street
Journal reports.

While rates have most
stayed stable the last five years, they’re now on the upswing. In 2000, the
average premium for home owners insurance was $508. In 2010, that grew to $807,
according to National Association of Insurance Commissioners and Insurance
Information Institute.

More premium rate
increases are expected in the near future too, insurers say, due to the
increased costs from natural disasters, such as the recent tornadoes that struck
the South and even the earthquake and tsunami in Japan.

Source: “While Home Prices May Be Falling,
Insurance Premiums Are on the Rise,”
The Wall Street Journal (May 17, 2011)

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