From the Record:
Homeowners’ insurance rates may go up as insurers seek to offset losses expected from the unusual pre-Halloween snowstorm that socked the region on Saturday, and from Hurricane Irene and other severe weather, according to industry observers.
“Rates usually don’t go up because of one storm,” said Loretta Worters, vice president of the Insurance Information Institute. “If there’s been a lot of disasters in certain areas over a period of years, there could be higher premiums where they see there is a lot of loss in a particular area.”
Some homeowners’ rates have already gone up this year, said Jennifer Manthey, a customer service representative at insurance brokerage Insurance Center of North Jersey in Hackensack, which received about 10 homeowners’ claims Monday morning.
“It’s unfortunate when people have been paying premiums for 20 years and they put in a small claim and their rates go through the roof,” Manthey said.
The average cost of a homeowners policy in New Jersey in 2008 was relatively modest at $691, ranking 25th among the states, according to the latest statistics available from the National Association of Insurance Commissioners. That was below the national average of $791. The highest-priced state was Texas with an average annual premium of $1,460.
Last year a number of insurers received permission to raise homeowners’ rates. The state’s top homeowner policy underwriter, State Farm Fire and Casualty, was granted permission for a 4.6 percent increase.
Most of the claims for this weekend’s storm will be from fallen trees and limbs damaging automobiles and roofs, Worters said. Tree removal is covered only if the tree hits a house under most policies.
J. Robert Hunter, an insurance expert from the Consumer Federation of America, said that even with high losses this year from storms and tornadoes, the property and casualty industry is flush with capital, and most insurers shouldn’t need to raise rates. Snowstorms such as the one that hit the region this weekend should already be figured into pricing models, he said.
“Theoretically, there shouldn’t be a major impact,” Hunter said. “Sometimes insurance companies use the opportunity of events like these to try to raise rates they wanted to raise anyway.”