Homeowners Feel Rise Of Insurance

Sept. 17--It costs more to rebuild it, and it needs to be done more often.

Higher prices for building materials and a series of floods and natural disasters are forcing Schuylkill County homeowners to pay higher insurance premiums, reflecting a nationwide phenomenon.

"Each year my homeowners insurance goes up. Many times when I ask about the increase, it is attributed to the cost to replace. I'm certain that is true, but it increases every year," Lisa Mahall, Schuylkill County engineer, said recently. "I would suspect that insurance coverage is on the rise just due to all of the natural disaster that have occurred throughout the country.

"When insurance companies pay out, the cost to insure goes up, and that pain is shared by all."

Craig S.L. Shields, CEO of Barefield Development Corp. and executive director of the Pottsville Housing Authority, agreed.

"All costs associated with owning a home have gone up," he said.

Peter W. Krammes, vice president of Personal Lines at The Seltzer Group, an insurance firm in Pottsville, said for the most part over the past few years, homeowners premiums have remained relatively consistent.

"It was not until last year, with the many storms and flooding in the area, did carriers take a significant rate change," he said last week. "I don't actually have statistics, but I would have to say the average homeowner's policy in 2008 cost $500 with modest increases to account for inflation. Today, the average cost is $600 to $700."

The price of materials and labor for repairs and reconstruction on damaged homes have had a "major impact" on the cost of insurance, according to information from The Seltzer Group.

According to the information packet, average winter storm losses have almost doubled since the 1980s; 2011 thunderstorms caused more than $25 billion in damage; and the cost of paint, copper pipe, asphalt shingles, wire and cable and insulation have all gone up, according to The Seltzer Group.

"Unfortunately, it will never go down due to rising costs," Krammes said.

Looking ahead, Krammes said the trend may lead to higher deductibles as well.

"My feeling is that people will need to increase deductibles to reduce their premiums and only submit claims that are catastrophic in nature," he said.

The standard homeowners deductible in 1970 was $250. In 2011, if adjusted for inflation, it would be about $1,462, according to information provided by The Seltzer Group.

The local pain is part of a national headache, as recent statistics collected by the National Association of Insurance Commissioners this year, and posted on the website of the Insurance Information Institute, New York City, show.

According to that NAIC study, the average homeowners insurance premium rose by 11.3 percent in 2009, following a 3.8 percent drop in 2008. The average homeowners insurance premium rose by 6.0 percent in 2009, following a 1.0 percent increase in 2008, according to a January, 2012 study by the National Association of Insurance Commissioners.

According to the NAIC, in 2009 74.3 percent of dwelling, fire and homeowners owner-occupied policies were written for insurance coverage amounts between $50,000 and $300,000.

In Pennsylvania, the cost of homeowners insurance is on the rise for a few reasons reasons, according to Dr. Steven Weisbart, chief economist at III, echoes The Seltzer Group in describing the Pennsylvania situation, adding an important detail about investment.

"Severe weather in recent years has caused record-setting insurance claims, and that's likely to continue. In addition, we're losing on investment income which would otherwise offset the increase in the premium rates," Weisbart said in a video on the III website.

"Homeowners in Pennsylvania are paying around (average) $719 for home insurance as of March of 2012. Rates have increased since February when Pennsylvania homeowners insurance premiums were approximately $701. The rate of $719 per year includes standard coverage and not flood or earthquake damage which is covered under a separate policy. Read more about flood insurance," according to homeinsurance.com, a resource for real estate information based in Wilmington N.C.

Schuylkill County homeowners pay an average of $719 per year for home insurance coverage, according to homeinsurance.com.

Not everyone is noticing the effects of storms and inflation.

"Personally, I did not notice a rate increase since they are escrowed and paid with my mortgage," Tiffany L. Reedy, Pottsville Area High School principal, said. "I have State Farm and get discounts for having my autos insured with them as well. I think of insurance as a necessary evil. I pay the premiums and pray that I never have to use them.

"Of course in this economic climate, any added expenses passed along to the customers are burdensome. I would guess that people may raise their deductibles to make premiums more affordable," Reedy said.

INFO BOX:

According to information from The Seltzer Group, Pottsville, here are four ways homeowners can keep costs in line:

- Pay all small claims (under $1,000) out of pocket. This way you can retain the loss free discount (if applicable) and avoid being surcharged for a small claim as well.

- Increase your policy deductible to $1,000 or greater. By doing this, it will help keep your cost down while still protecting you from a catastrophic loss.

- Consider billing options to reduce or eliminate service fees. Many carriers offer Electronic Funds Transfer, Reoccurring Credit Card or Paid in Full payment options.

- Place your auto and homeowners policies with the same carrier for the multipolicy discount. Keep insurance costs in line

Here are four ways homeowners can keep costs in line:

- Pay all small claims (under $1,000) out of pocket. This way you can retain the loss free discount (if applicable) and avoid being surcharged for a small claim as well.

- Increase your policy deductible to $1,000 or greater. By doing this, it will help keep your cost down while still protecting you from a catastrophic loss.

- Consider billing options to reduce or eliminate service fees. Many carriers offer Electronic Funds Transfer, Reoccurring Credit Card or Paid in Full payment options.

- Place your auto and homeowners policies with the same carrier for the multipolicy discount.

Source: Information from The Seltzer Group, Pottsville

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