Why have my home insurance rates gone up?

In Colorado in July 2009, we had a major hail storm come through Denver and surrounding area’s. It came through and caused a little bit of property damage to homeowners roof’s. Now depending on the roof condition, a lot of homeowners filed a claim due to hail damage to their roof’s. Not only did I have a lot of clients who got new roof’s, but also I saw a lot of neighbors and people I didn’t know, by driving around the neighborhood and seeing these new roof’s getting replaced. A lot of roofer’s were going door to door, trying to sell people new roof’s paid by the insurance company. I knew a lot of people who were incredibly happy about their new roof’s and how the insurance companies, with no haggle, replaced their roof.

So what is the unintended consequences of all these roof’s being replaced? Well lets face it, the insurance company makes money off of your premiums you pay each year. So what happened when homeowners got their insurance re-newels? Well, a lot of them experienced sticker shock. Lets face it, the insurance company has to make it up those losses some how. So what they do is raise insurance premiums all across the board. This very unfair to the consumers who didn’t file a claim, but premiums are based off of loss experience.

So next time you get an insurance re-newel and your unhappy about the premium increase, don’t forget the insurance company just bought you a new roof. And if your one of those consumers who got hit with a premium increase and didn’t get a new roof. Maybe next time you should consider, because people will always take advantage of a new roof paid by the insurance company.

Loss experience + return on investment = Insurance premium rates.

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