Fire Safety isn’t just for Thanksgiving

Atlanta Home Insurance Increase

Atlanta Home Insurance Increase

The Rising Cost of Atlanta Home Insurance

Georgia has been on the wrong end of heavy rate increases for almost a decade now.  Although much of the focus has been around the increases to auto insurance, it is now Atlanta’s home insurance that is seeing some of the steeper rate hikes.  Why is this?  We went on an expedition to find out and our research uncovered eye-opening statistics on both our region and the entire country.

Catastrophe Event Frequency Has Doubled

The first breakthrough in determining the reasons for rising Atlanta home insurance costs came from data compiled by an insurance company.  Munich RE, a reinsurer who tracks claim data, determined that between the year 2000 and 2017 the frequency of major weather events has doubled!  You read that right…. doubled.  If that was the only factor that changed, we would still be in big trouble as the money to pay for these claims has to come from somewhere (our premiums).  However, inflation alone has driven the cost per event up over 40% during that time period.  Add in the additional costs for new technologies and increased construction costs and it is a miracle our home premiums haven’t tripled!

The New Tornado Alley

One of the most interesting discoveries we made during our research has a very direct impact on the home insurance premiums in our local area.  As tornado researchers began tracking these events, they noticed that “Tornado Alley,” which includes states such as Kansas and Oklahoma, is not being hit as hard as the Southeast.  Although the frequency of tornadoes remains higher in Tornado Alley, the severity is worse in the Southeastern states, which researchers have dubbed, “Dixie Alley.”  These states include Mississippi, Alabama and you guessed it, Georgia, among others.  For context, Alabama averages 14 deaths annually from tornadoes while on average only 10 people die a year in Texas, Oklahoma and Kansas combined.  Part of the reasoning is that tornadoes in Dixie Alley are typically stronger and stay on the ground longer than their Tornado Alley counterparts.  This leads to greater destruction and insurance premium increases for the Southeastern states.

Good Economy = Increased Home Rebuilding Cost

The economy has been on a historic run since the end of the 2008 financial crisis.   While this is a good thing in many respects, it has produced ever increasing demand for new construction and renovations throughout the country.  In simple economics, with this demand comes an increase in labor and material costs, which drive up prices for homeowners and insurance companies building or repairing homes.  In some cases, we have seen materials such as lumber rise as much as 20% in a twelve-month period.  Other cost factors have increased significantly more than that!  One example is the cost of  top end refrigerators, which increased 130% since the year 2000 while a top end dishwasher has increased 93%.  The cumulative effect of all these increases has put a significant strain on the cost of Atlanta home insurance.

What Can You Do to Control Atlanta Home Insurance Costs?

Although there is nothing you can do to stop the rising home insurance costs in general, there are things you can do to protect your own home and save money at the same time:

  • Water Detection and Shut Off System: Plumbing system failures are the leading cause of residential water losses and homes between 16-40 years old are most at risk. An automatic shut off system is the best prevention method and can also save you money on your Atlanta home insurance!
  • Central Station Fire and Burglary Monitoring: Having your security system monitored is a good way to save extra premium, but the real value is having a system that may save your actual home or your life!  Make sure you discuss with a professional to install smoke detectors in less obvious places such as the attic, garage or mechanical room.
  • Lightning Protection System: One lightning strike can fry all the electronics in your home or even cause the house to burn down.  These systems help lessen your risk so you don’t have to call us after a storm.
  • Higher Atlanta Home Insurance Deductible: The standard home deductible that we advise has continued to rise over the years.  People used to carry a $500 deductible, but it now makes sense to carry a minimum of $1,000, 2,500 or many times even higher depending on the situation.  The reason for this is two-fold,
    1. If you practice good home protection practices, you can minimize your risk of a loss. Therefore, your higher deductible will save you more money over time than the cost of paying it should something ever occur.
    2. Because losses have been so bad, Atlanta home insurance companies have become stricter in their underwriting practices. In some cases, if you have even had one home loss in the past three years certain companies would not write you coverage.  Crazy right?  Unfortunately, that is the environment we are now in so our job is to help you manage it the best we can!

There is nothing we can do about the overall market factors pushing up Atlanta home insurance costs; but armed with this information, our hope is that you can better navigate the market to keep your home safe and premiums in check!

Why is my Atlanta home and auto insurance more than my neighbor?

There has been a heavy focus on Atlanta home insurance and auto insurance rates over the past couple of years. This is primarily because the good folks of Georgia have suffered through the worst rate increases in the entire country over that time. This has caused thousands of people to set sail on a journey searching for cheaper auto and home insurance rates desperate to shave costs. A common question we receive is “why are my rates higher than my (insert neighbor, friend family member here)”?

The answer is more complicated than many people imagine…

Although no one in Georgia can escape the sweeping rate increases coming from almost every insurance company in the state, there are things you can do to lessen the blow. Many people do not realize how individualized insurance rating has become over the past decade. In years past, if two people lived on the same street and had the same home value then they could expect to pay about the same for insurance coverage. Today, insurance rates are complex formulas that take many individualized points of data into account. One of the primary factors in your cost is now linked to your credit score. You could have two people with the exact same home and their insurance could vary by hundreds or even thousands of dollars in premium. There has certainly been debate on how fair this is as it certainly punishes people who have hit on hard times financially through no fault of their own. I mean, what does my credit have to do with a tree falling on my house, right?! However, the insurance industry has strong data correlating losses to credit scores so this is a reality for Atlanta insurance that is not going away any time soon.

So what can you do to overcome these challenging times?

Make your credit score a priority by doing the following,

  • Pay your credit balances in full each month (don’t fall for the minimum amount due!)
  • Make sure your revolving balance is as low as possible compared to your credit limit
  • Do not open multiple new accounts at the same time (each new account harms you in the short term)
  • Limit “hard hits” to your credit such as credit checks for car loans or mortgages
  • Do your best to live within your means and not get into credit card debt. It is a slippery slope that impacts you in more areas than you realize

Although credit score is not the only factor, you could make a convincing argument it is the most important one when it comes to the premium you pay for Atlanta home and auto insurance. It certainly doesn’t hurt to be a safe driver and properly maintain your home either but that is a conversation for another day!

When the tree falls, who pays?

The relationship between you and your neighbor is one of the most sensitive unchosen relationships you will encounter in life.  It is likely neither of you conducted interviews prior to the purchase of your home so you are pretty much stuck with the person next door, for better or worse.  Hopefully this relationship is relatively free from strain but one disaster is always looming, ready to tear your fragile coupling apart.  The neighbor’s tree falls on your property or vice versa.  The question both of you are now asking is who pays?

There are three possible outcomes to this unfortunate event,

  1. You Pay
  2. Your Neighbor Pays
  3. You Both Pay

Depending on the condition of the tree and communication between you and your neighbor either 1, 2 or 3 could be correct. Most Homeowners insurance policies cover damage to your fence and home from a falling tree subject to the deductible you have selected. Therefore, the question of who pays will most likely involve both your homeowner’s insurance company and your neighbor’s depending on the situation.  Also, a deductible will have to be paid. Let’s examine three situations involving a tree falling.

Your neighbor’s healthy tree falls on your house.

If the tree is truly healthy and shows no signs of disease or dead limbs, then your neighbor will not be considered negligent. Therefore your insurance company should pay to repair the damage to your house. Of course this means that you have had to pay a deductible of $1000 or higher depending on your policy. This seems unfair since it was not your fault but unfortunately this is how it will typically play out if there are no extenuating circumstances. But let’s see what happens in the next case.

Your healthy tree falls on your neighbor’s house.

In this situation your neighbor’s homeowners insurance company should pay to repair the damage caused by your healthy tree. Just as in the previous case, the deductible will have to be paid by the homeowner. Perhaps, you really like your neighbor and even though you are not “negligent” you can offer to pay your neighbor’s deductible or split the cost. Or, perhaps now is a good time (before a tree falls) to discuss this with your neighbors and decide that if a healthy tree falls each neighbor will pay their own deductible.

Your neighbor’s un-healthy tree falls on your house.

If your neighbor knew, or should have known that the tree was diseased and failed to have it removed, then you may recover the damage to your home from your neighbor or your neighbor’s insurance company. The key issue; “Did you put your neighbor on notice that the tree was a hazard to you and your property?” If you had noticed that the tree was diseased and notified your neighbor in writing, then your chances of collecting the full cost of repair are better although not guaranteed. Presented with a copy of the letter, your neighbor’s insurance company will have less of a defense to deny the claim from you or your insurance company. However, if they are reluctant, your own insurance company will pay for the repair (less your deductible) and then attempt to collect from your neighbor’s insurance company (including your deductible).

So what should you do now?

We always recommend having an arborist come to your home and review the health of your trees (and those around you) AT LEAST once every three years if not more frequently.  If they find any problematic trees you should address the issue as soon as feasible.  The arborist will also be able to recommend basic trimming and maintenance that can help your trees remain healthy and less likely to fall victim to a strong gust of wind.  Don’t forget, although we can get caught up and frustrated about who is responsible, ultimately our goal is to avoid the situation altogether because nothing is more important than the safety of our loved ones.