Why is your home insurance cost going up?

Homeowners need home insurance -- that's just the way it goes. Some people think the cost of home insurance is a waste of money, but if you've ever had a flood, fire, theft, or other damage to your home then you know the cost of the insurance premiums is worth it.

Home insurance helps covers some (or all) of the costs associated with damage to the structure of your home or your personal belongings inside. If you don't think you need home owners insurance, just think about what would happen if your house flooded and all your furniture was ruined. How would you pay to clean up the mess, repair the floors and drywall, and replace all your belongings? That's what you need insurance for.

How is home insurance calculated?

The annual cost (which can be paid monthly) of your home owners insurance is calculated based on a variety of factors including (but not limited to) where your home is located, the size and estimated value of your home, and the structure type and year of construction.

It's best to shop around for home insurance and get at least three quotes from different insurance providers. Remember to compare the exact same coverage to ensure you're getting all the protection you need at the best rate.

Why are my home owners insurance premiums increasing?

Home insurance premiums increase for a variety of reasons, like how often you file claims and where you live. Residents of New York and New Jersey saw their premiums increase after Hurricane Sandy. It was a circumstance beyond their control, but it cost insurance companies millions of dollars in claims.

Filing even one insurance claim can increase the cost of your premiums according to CNN: "On average, filing a single claim -- for anything ranging from a stolen bicycle to tornado damage -- will result in your monthly premium being raised by 9%. The type of claim (also) matters. Liability claims, such as from personal injuries, are the most expensive type of claim, with insurers raising premiums by an average of 14%."

What can I do to lower my home insurance costs?

One way to lower your home insurance premiums is to increase your deductible. The deductible is the amount that home owners will pay out of pocket before the insurance company starts to pay for expenses. The higher the deductible the less the insurance company will have to pay and therefore the lower your insurance premiums will be.

Another way to lower your home insurance costs is to ask for all applicable rebates. When shopping around for home owners insurance don't be afraid to ask for discounts based on your profession, credit score, and loyalty as a customer. Many companies offer discounts for bundling several insurance products with one company. It never hurts to ask -- especially if it saves you money.