Can My Insurer Raise My Premiums Without Notifying Me?
Homeowners insurance is designed to protect homeowners from loss in the event of any number of situations that they might face. Storms which damage the home, fires that destroy the house or the property, lawsuits from visitors who are injured on the property, or vandalism or other damaging elements. Homeowners insurance is not required by state or federal law, but most mortgage companies do require you to have a minimal level of the insurance at least until the mortgage on the home is paid in order to protect their investment. So what if the insurance company wants to raise your rates, can they do it without telling you?
The good news is that generally homeowners insurance policies cannot be arbitrarily raised against you personally for any reason at all. Homeowners insurance policies are regulated much like the utilities within a state, meaning that the insurance company has to get permission to raise rates, and when they do so, they have to raise rates for everyone they service…not just you.
Insurance Rate Tracking
Those who are tracking your insurance premiums to decide whether or not to increase them or give you a break are the actuaries – those wizards of formulary who make decisions based on a variety of information to decide what a good, profitable amount to charge everyone for insurance is. Not everything is based on the customers alone, market factors can case insurance rates to change as well – legislation changes will most often force a request for an insurance rate increase, changes in weather patterns that significantly reduce risk may lead to an insurance rate reduction for everyone in the area.
Do You Have an Right to Know in Advance?
If, in their great wisdom, the actuaries decide to raise your insurance premiums, do you have a right to be notified in advance of the increase? Well, yes and no…actually, insurance companies do have to notify the state of an insurance increase – in effect, requesting permission for the insurance rate increase. Once they receive this permission, they can increase your rates and, in most states, they are not required to notify each individual policyholder as well. Keep in mind that most insurance companies will notify their policyholders voluntarily, but they are not usually under any obligation to do so. Matters regarding notification requirements for the insurance industry are left up to the various state laws governing them.
It is also important to note that homeowners insurance companies:
Cannot raise your rates individually but… they can decide to cancel your policy or rather "non-renew" it when it comes up for renewal at the end of your current policy term. Usually insurance companies will take this route if a customer's claims have become too large or numerous to make them profitable anymore, and by cutting you lose…
A new insurance company can give you a higher premium. When shopping for insurance if you've had your policy canceled or you're just sick of your current company, based on the number of claims you have filed in the past with your other company, you may be given a higher rate right from the start with them.
Also, you don't want to assume that just because homeowners insurance rates go up and down together, it doesn't mean you're paying the same amount as your neighbor. Many factors go into setting your insurance premium when you sign up with a company and your rates will adjust uniformly from there.