What Makes Home Insurance Expensive?

Insurance carriers take hundreds of factors into consideration when calculating premiums. Here are the six things that make the biggest difference to your home insurance rate:

  1. The location of your home: Texas is prone to hurricanes, and past events have shown insurers that homes close to the coast or to large bodies of water are more likely to incur losses. Consequently, these homes are more expensive to insure against weather-related perils. Some inland areas – particularly around Dallas/Fort Worth – regularly get devastating hailstorms, which have intensified in recent years, and have subsequently caused big premium increases in those areas. There are also less obvious factors at play, meaning that some zip codes are consistently more expensive for insurance than others, which is related to past losses in an area and the complicated algorithms that insurance companies use to determine risk.
  2. The age of your home: The days of sturdy, stone-and-brick homesteads built to last hundreds of years are long gone. These days, the chance of something going wrong with your home starts to rise rapidly after about 10 years of age. Roofs become less weather-resistant and need replacing, plumbing and other internal systems are more likely to malfunction, and nearby trees grow larger and become more likely to topple onto your house. The equation is simple: older home = higher chance of a claim = more expensive insurance!
  3. The age of your roof: Today’s shingle roofs are designed to last about 15-20 years. Insurance companies know this, and will therefore charge a higher premium for older roofs, offer an Actual Cash Value policy only, or even refuse to insure your home at all. Tile or metal roofs have longer lives, but the flip side for insurance companies is that they cost more to replace if destroyed by a hurricane.
  4. Type of plumbing: Homes built before 1985 that have not been completely updated may still retain all or some of their original galvanized pipes. Statistically, these kinds of pipes are far more likely to corrode and develop leaks than modern PVC piping. If your home still has galvanized plumbing, you will have a smaller choice of insurance carriers, and premiums will be more expensive.
  5. Your “insurance score”: Whenever you get a quote, insurance carriers run an “insurance score” on one or both applicants. This is a bit like a credit check and takes lots of factors into account, but it does not affect your credit score in the same way that a loan application does. If your insurance score is low, you could be paying more for the exact same policy than someone who has a high insurance score.
  6. Prior claims: While there is some leniency towards weather claims (after all, a hurricane is not your fault!), insurance companies are wary of homeowners who have multiple claims on their record for things like water damage, theft, and – especially – liability. Any zero-paid-out claims (where the amount of the claim costs less than your deductible) can also hike your premium at renewal. So it’s best to make absolutely sure BEFORE you file a claim that it’s going to be worthwhile to do so – your agent will be able to advise you.

The golden rule is – as always – to give your agent a call! Memorial Insurance Agency’s licensed agents will be happy to provide you with a quote, help you to decide whether to file a claim, and answer any questions that you may have about insurance.

5 Reasons to get Uninsured Motorist Coverage

Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage is an essential part of your auto insurance policy. Yes, it is optional and you can “reject” it in writing, but you’d be crazy to do this considering that an estimated one in five drivers in Texas may be driving around with no insurance at all, and millions more drivers have only the bare minimum of coverage.

How do UM and UIM coverages protect you? They step in to cover bodily injury and property damage if you get involved in an accident with a driver who either has no insurance, or whose insurance limits are less than the cost of the accident. Hit-and-run accidents – where the other driver flees the scene – would also be included in the UM/UIM part of your auto insurance policy.

So, why get UM/UIM? Here are 5 very good reasons:

  1. The number of uninsured motorists is increasing As insurance costs spiral ever higher, so too does the number of people willing to “chance it” and drive without insurance. This is especially true in large cities like Houston which have among the highest auto insurance premiums in the nation.
  2. The number of uninsured motorists may continue to rise Research has shown that the number of uninsured drivers is directly related to the strength of the economy. If we enter another recession, the numbers of people without insurance will increase, so you should be prepared for this well ahead of time.
  3. Minimum liability limits are too low Even if you already have UM/UIM coverage, if you have only the minimum 30/60/25 limits ($30,000 per person, $60,000 per accident, and $25,000 for property damage) you will likely have too little coverage under your policy to pay for a serious accident. Guess what happens if you run out of coverage? Yup, you are going to be paying the rest out of your own pocket, and those medical bills do not come cheap.
  4. Increasing your UM/UIM limits is not expensive It usually costs just a handful of dollars a month to upgrade from 30/60/25 to 100/300/100 or more – giving you a lot more coverage (and peace of mind) for very little additional cost.
  5. The chance of collecting money from an uninsured motorist is low Someone who is driving without insurance most likely has few assets, so pursuing a claim against them will likely to be an expensive waste of time, especially considering the legal fees involved.

The moral of the story? Speak to your agent at Memorial Insurance today to make sure the UM/UIM limits on your policy have you covered if the worst should happen!

Telematics: the Future of Auto Insurance?

Telematics is a technology-based system whereby insurance companies assess your auto insurance premiums based on your driving habits. The idea is to create a fairer system of auto insurance, by rewarding safe drivers with lower premiums – as well as providing a much more accurate way for insurers to assess risk.

You may know Telematics by other names such as Right Track (Safeco), Snapshot (Progressive), or IntelliDrive (Travelers). Drivers participating in the program download an app to their phone, or plug a device into their vehicle, which measures their speed, acceleration, braking, and night time driving, for a period of 90-365 days. At the end, safe drivers receive a discount from their auto premium, or a lower rate for their auto insurance renewal.

Some industry analysts predict that nearly all auto insurance policies will be primarily telematics-based within five years. It’s good news for driver safety, and also for premiums. Most carriers offer a 5% discount just for taking part in the program, with up to a further 20-30% premium reduction available on completion.

Give your agent at Memorial Insurance a call to see which Telematics program is available for your auto policy, and whether it would be a good fit for you.

Drive safe!

6 Things to Look For in Home Insurance Mailers

Ever had something like this through the mail? Most likely you receive several of them every year in the lead-up to your home insurance renewal. They may sound tempting …. but how do you know if it’s a good quote? What should you be looking for? Let Memorial Insurance be your guide!:

  1. Coverage amounts: Do these match your current policy? They are often lower, because less coverage means a cheaper price. Your agent has several tools available to work out exactly how much your home should be insured for.
  2. Bells and Whistles: On this quote, $1,000,000 in personal liability is eye-catching, especially if your current policy offers “only” $300,000 or $500,000. But if you have an umbrella policy (which you should!), you’ll already have the high liability coverage anyway. And if you want to add higher liability to a homeowners policy, it’s only going to cost a few bucks a year. So this feature is not nearly as impressive as it sounds!
  3. Extended Replacement Cost: Some agents offer relatively low dwelling coverage amounts, but add the extended replacement cost endorsement and tell you it’s additional coverage for your home. This is not true. Extended replacement cost applies when a large area is afflicted by a catastrophe (for example a Category 4 hurricane), and the subsequent increased demand for materials and contractors pushes repair costs sky-high. This endorsement allows for extra coverage but ONLY in the event that replacement cost increases in your area as a direct result of a natural disaster. If faulty wiring causes your house to burn to the ground, you’ll get only your basic Dwelling Coverage amount from your insurance company.
  4. Deductibles: This quote headlines with the 1% deductible, but notice the cheeky 5% deductible in the middle? This part is the deductible for a named hurricane. If you keep in mind that named hurricanes are one of the leading causes of insurance claims in many states, including Texas, do you really want to be on the hook for a 5% deductible the next time a major weather event blows through? In the case of this particular policy, you’d be looking at a $30,000+ out of pocket payment before the insurance company stepped in to take care of the rest. If this is something you can afford and would be happy to pay for, then stop reading here! In Houston, a 2% hurricane deductible is standard, with 1% also available in some areas. At Memorial Insurance, we’d be happy to provide several quotes with different deductibles so you can make an informed choice and NOT get a nasty surprise after the next hurricane.
  5. Total Premium: The advertised rate on this quote is NOT the final price, it is a guess based on you having the best possible credit and zero prior claims. To get the final rate, insurance carriers run an “insurance score” taking into account the above plus many other factors. More than nine times out of ten, when you call the agent to take the quote, your premium will increase.
  6. Exclusions: Sure, this quote tells you that your contents are insured for replacement cost. But how about the roof? See my earlier blog post for details of why you do NOT want an Actual Cash Value (ACV) policy. Moreover, are water coverages (slow seepage, water backup, foundation water damage) included? Most likely not, because these increase the premium, which would make for a less impressive mailout!

Moral of the story: if you’re interested in a quote you receive in the mail, make sure you get an “apples to apples” comparison with your current policy to make sure all the coverage levels match. Better still, why not give Memorial Insurance a call – we have most of the main home insurance carriers in our agency, so we will do the shopping and comparing for you, and make 100% sure you are correctly insured!