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Home Insurance

Keeping a Lid on Home Premiums

Last year 's calm weather is good news for homeowners across the country.

The homeowners-insurance business was a lot more tumultuous than the weather last year. Insurers were still reeling from more than $50 billion in claims from Hurricane Katrina and other big storms in 2005. Allstate dropped 26,000 customers in New York State when their policies came up for renewal, and stopped selling new policies in parts of the state.

But this year the situation is more placid. Although Allstate is expected to drop another 26,000 customers in New York State, the mass exodus seems to be over. No other companies have petitioned the state insurance department to drop more than 4% of their customers (which they may do without special permission), and rate increases have tended to be in the single digits, says spokesman Andrew Mais.


Protect Your Coverage on the Coasts

Insurance Deals Along the Coasts

Premiums for waterfront property in Maryland have settled down a bit, too. "We were seeing 40% to 50% rate increases two to three years ago," says Mike McCartin, an independent insurance agent in College Park, Md. "We're out of that."

Some coastal states have taken action to improve the marketplace. For example, after the Florida legislature expanded the state's catastrophe fund in January, dozens of insurers filed to reduce rates, says Kevin McCarty, Florida's insurance commissioner.


PURE High Net Worth Insurance is among the new companies that have smelled opportunity and actually entered the coastal business in the past year. "They're cherry-picking the best risks in Florida," says Rebecca Woan, an independent agent with Chartwell Insurance Services, in Chicago. "They know that the affluent use quality building materials and maintain their homes better. Plus, their larger homes are more likely to withstand wind."

Good news from the heartland. Homeowners-insurance choices are even better the farther you get from the coasts. Rates have either remained flat or are dropping by an average of 2%, says Robert Hartwig, president and chief economist for the Insurance Information Institute.

In such areas, it's safe to shop around for a good deal (to check a company's A.M. Best financial-strength rating, go to When Kevin Welsh bought a 1925 rowhouse in the Glover Park neighborhood of Washington, D.C., this year, he contacted three companies for quotes. The price range was huge: One insurer wanted nearly twice as much as another. Welsh went with Erie Insurance because its quote -- $850 a year -- was the lowest and because it's one of the few insurers that offers guaranteed replacement coverage. Most insurers cap coverage at 125% to 150% of your insured value, so it's up to you to keep your coverage amount up-to-date (to run the numbers, use the replacement-cost calculator at for $7.95).

Welsh saved even more money by choosing a $2,500 deductible. He also asked about gaps in coverage and bought a rider for about $30 that covers him in case of a sewage backup or if he is required to rebuild to meet modern building codes (valuable coverage if you own an older home).


Surprisingly, homeowners can still buy flood insurance for homes without basements in low-risk areas for $317 per year for the maximum $250,000 in dwelling coverage and $100,000 for possessions (it's $352 if you have a basement). Get premium quotes for federal flood insurance at And do it now: There's a 30-day waiting period for coverage.