If your house burns down, or your pipes burst and flood your house, your homeowners insurance is there to pick up the cost of repairs. But over the years, changes to the house and the construction market may increase what it costs to take care of any damage.
Why the Increases:
In today’s economy, where the value of consumer goods increases each year, building materials are no different. Your house will cost more to rebuild each year due to these increases. Most homeowners policies with replacement cost coverage will only pay the full price of replacing your home if the insured value is at least a certain percentage of the actual replacement costs, usually 80 percent.
Changes to your home:
If you add on a deck, garage or remodel your kitchen that will add substantial value to your home, and it will cost that much more to repair. If you don't upgrade the amount of your coverage with it, you may find yourself unable to pay off damages. By increasing the insured value of your home each year, you are more likely to stay within the limits of the policy and not be surprised to find you have insufficient coverage to rebuild the house if it is destroyed by a fire or tornado.
According to a study by the National Association of Insurance Commissioners (NAIC), the average homeowner’s insurance premium rose by 6.0 percent in 2013, following a 5.7 percent rise in 2012. The average renter’s insurance premium was unchanged in 2012, after rising 1.1 percent the previous year.
The average cost of home owner’s insurance across the United States in 2012 was $1,034. The average cost of home owner’s insurance in Texas, in 2013 was $13,545.