According to a recent research by insurtech platform Matic, rising house insurance rates disproportionately affect elderly and homeowners with poor credit ratings.
The mid-year study conducted by Matic examined patterns from 45,000 contracts and 3.2 million quotations. It discovered that house insurance rates increased by a proportion of 4% year over year.
According to the study, individuals with FICO scores under 580 are disproportionately affected by rising house insurance rates – as homeowners with this characteristic experienced the greatest rise in premiums, at an average of 6.4 percent.
“In the majority of states, an insurance score, which is influenced in part by a credit score, indicates the likelihood of a claim being filed and impacts the price a homeowner would pay for media attention,” said Ben Madick, co-founder and CEO of Matic Insurance.
“Even prior to COVID-19, the housing market, material costs, and labor costs were all increasing. “Those increases are now represented in the projected replacement cost of the house (Coverage A), which eventually results in increases in insurance premiums, among other variables.
While homeowners with low FICO scores saw a disproportionate rise in rates, they are getting improved coverage, and the gap among premiums and Coverage A is narrowing.”
Additionally, the research discovered that homeowners over the age of 63 are most likely to overspend for house insurance. While rates are typically greatest for homeowners between the ages of 43 and 55, Matic discovered that premiums for elders do not decrease proportionally.
According to the statistics, seniors are overpaying their insurance premiums as a result of not reviewing their policies frequently and yearly price hikes compounding over time. Seniors may save an estimated of $751 per year by monitoring, evaluating, and changing their insurance plans, according to Matic.
“Numerous variables lead to significant savings,” Madick said. “While home renovations and auto bundling may have a factor, the most frequent instance is from a client who has resided in the same residence for more than two decades. Even if there are no claims, a homeowner’s rates will generally rise by 3% to 4% per year. That growth is not trivial over time.”
According to industry surveys, 40% of homeowners haven’t yet checked their policy in the past two years. There are many other factors affecting as to why rising home insurance premiums disproportionately impact homeowners.
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