If you’re like me, you’ve gulped when your property insurance renewals arrived in the mail. It’s not a big rip-off, and insurance agent Grace Catao, owner of Habitat Insurance, gives us some straight-up intel on why it’s happening and what we need.
With surging property prices in the Lower Mainland, homeowners who bought into the market in the last few years are sitting pretty: their assets have appreciated spectacularly.
However, increased property values have resulted in substantial increases in property insurance premiums. In some cases, we have seen increases as high as 50% to 100% in the last year.
This, of course, leads to much dismay for homeowners when they get their renewal policies.
When faced with a much higher premium, a property owner may be tempted to cut corners and insure the property for less than its market-related value.
What owners need to keep in mind is that since October 2003, construction prices have increased at a rate of approximately 1% to 2% per month. This scenario is unlikely to change in the near future, with market conditions demonstrating continued high demand for construction materials, services and trades.
In the event of a major peril occurring – such as a fire in which the entire home is destroyed – the property owner who scrimped on insurance may well find himself entitled to an insurance claim that will be insufficient to rebuild his home.
A homeowner who is concerned about rising premiums should speak to his broker about 1 to 2 weeks before the policy expiration date. A good broker will review the policy and explain the reasons for the increases. This will also be an opportunity for the broker to look for better rates with other insurance companies or restructure the policy.
Ultimately, a homeowner must keep in mind that his home is probably his single most valuable asset and must be appropriately insured: this may save a lot of heartache and money in the future.
Copyright© 2007 – All rights reserved – Grace Catao
Habitat Insurance Agencies Ltd.
“We’ve got you covered”
Vancouver BC V5N 2T5
e-mail Grace at habitat insurance dot calm