AAA Insurance offers advice to homeowners
COLUMBUS, Ohio (June 15, 2021) – In the coming months, many Ohioans may notice an increase in the amount they pay for homeowners insurance. That’s because it now costs more to replace homes after disasters, due to rising lumber and labor costs. AAA Ohio Auto Club Insurance Agency offers homeowners advice for minimizing the impact of these rising premiums.
What’s Behind the Increase?
Most insurance policies automatically include a tool called Inflation Guard. This helps insurance companies make sure the coverage for replacing a home keeps pace with the actual cost to replace or repair items.
Inflation Guard automatically increases your home’s replacement cost 2-4% each year, on average. The additional coverage is added to your dwelling coverage, but also impacts other structures, contents and additional living expenses.
“Due to the rising cost of goods and services, and lumber in particular, we’re seeing insurance companies take higher than normal Inflation Guard increases to ensure policyholders are not underinsured,” said Ed Conley, director, insurance and financial services for AAA Ohio Auto Club. “Many companies are seeing home replacement costs rising as much as 8% this year. Because of this, homeowners will notice their insurance premiums rising as well.”
However, while replacement cost coverage will see large increases this year, most homeowners will only notice their insurance rates increasing 0-3%.
What Can Homeowners Do?
“It’s good to talk with your agent and review your home insurance every 18 months or so, and especially after you’ve made any material changes to your home,” said Conley. “In 2020, home renovation and hardware stores saw dramatic increases in purchases for home improvement projects. If you upgraded your home in the last year, we recommend having a 15-minute conversation with your insurance agent to make sure you have the right coverage, and don’t miss out on discounts you qualify for because of the updates.”
To help minimize the impact of insurance rate increases, AAA recommends homeowners:
Be proactive in preventing costly claims:
.Clean out your gutters
.Inspect your sump pump and purchase a battery backup
.Routinely check smoke detectors and replace as needed
.Tell your agent about updates to your home:
.Updates to your roof, plumbing or electric can reduce your annual premium
Take advantage of discounts such as:
.Smart sensors to detect water or gas leaks
.Multi-policy discount: Insure your auto and home with the same company
AAA suggests reviewing your replacement cost coverage (also known as Coverage A, or Dwelling Coverage on your policy) with your agent.
Keep in mind, insurance premiums can rise or decrease each year, independently of Inflation Guard. Inflation Guard is just a small piece of the overall rate that is applied at insurance renewal.
For additional insurance information, visit AAA.com/Insurance