If you're worried that you'll soon be paying more for your homeowners insurance, you may not be far off. In fact, that's a more reasonable concern than, say, wondering whom Gwyneth Paltrow is consciously uncoupling from.
In fact in some states, premiums have risen so drastically—Texas being one of them, soaring 14.9 percent—that they've become a hot and controversial political topic. So, what causes a rate hike? The answer to this basic question lies in actuarial calculations, that is, insurance companies' need to "collect enough money and pay only a few claims in order to make a profit after business expenses." By understanding this premise, you may be able to avoid a hit.
For more warning signs of an impending rate increase, read on:
• Filing a claim. The irony is that you are required to purchase homeowners insurance to offset any hazards that may happen, yet according to a recently released report by InsuranceQuotes.com, putting in even one claim results in an average hike of 9 percent nationwide, and an average of 32 percent in Wyoming.
"Even a denied claim can cause your premium to go up," says senior analyst Laura Adams.
A second claim will get you an average of a 20 percent increase, per the report, with Michigan policyholders taking the hardest hit for as much as 71 percent.
• Unacceptable roof care. Everyone knows that a home's "curb appeal" can make or break whether prospective buyers flock to (or run from) your residence without even opening their car door. Insurance adjusters are no different, preferring to perform their own "drive-bys." Their main concern? How well your roof is holding up.
If it looks to be in bad shape, insurers can jack up your rate or cancel your policy entirely. "Insurance carriers would prefer not to cover a home when a roof looks like it's about to fail," says one expert.
If, on the other hand, the same adjuster sees that you've got a snazzy new roof, your rate may actually decrease.
For those who prefer the latter scenario (and who wouldn't?), Jason Joplin, program manager of the Center of the Advancement of Roofing Excellence, says to check out the Timberline collection of shingles from GAF (www.gaf.com)—North America's largest roofing manufacturer—since those shingles have the advantage of being "rugged, good-looking, and affordable" all at the same time.
• Changes to the neighborhood. Has your once-cozy suburban neighborhood ballooned in size? If so, actuaries could spot a pattern and conclude that your neighbors may have recently filed those dreaded claims.