annual increasing insurance costs - What does everyone do?

Question

So, when I was doing my research before making purchases I allowed for all the costs involved, however each year my insurance rates climb a little higher even though I have made no claims. If you push this out for decades, the cash flow eventually dwindles... I don't recall seeing this issue discussed in the books about this when I was getting started. What does everyone do to combat this?
Do you have to just shop insurance annually?
The increases are happening at a rate that is too high for me to equalize through rent increases.
Thanks, Todd.

Todd Aaron · Answer

I am not handling any of it personally.  The current broker is doing that at the moment.  In the last two years my rate increases have caused an additional $70 a month increase on my escrow payment for one property alone. About half that each year. The other property is increasing similarly. To me, that seems a little excessive. I also have him doing my cars because there was supposedly additional discounts available that way. Moving forward I guess I will have to add additional cushion so that I can at least account for the increases.  I was guessing that it would not increase at this rate when I got into this.

Matt Moylan · Answer

@Todd Aaron  Unfortunately, this is just the world we live in.  Insurance, like most other things, increases over time. As an industry, it doesn't matter if you make 0 claims over 30 years, your premiums will increase.

In my opinion, the best way to put yourself in a great position is find a broker who can shop mutliple carriers.  This way every couple years they will be able to look at the market and inform you of what is going on and what they see.  By staying with one of the "big companies" you are subject to less unbiased opinion because they are only able to provide coverage for that one carrier.

My recommendation, event to my clients, is every 3-5 years we look at the market and see if there is a better option for them.  If so, we shop around.  If not, we keep the policies where they are.

• Is      your broker guiding your renewal process each year or are you dealing with carriers      directly?

Please message me directly if you would like any guidance on your renewal process.

Timothy W. · Answer

The best thing to do is revisit your policy and see EXACTLY what it covers and then make sure you aren't insuring for too much.  Your house may "cost" 250k to rebuild but that may include the foundation and underground pipes, which are typically NOT covered under your policy.  So why would you insure for 250k when it should be 220k in insurance for what the insurance company is actually insuring?