Insurance rates sky rocketing despite efforts to improve fire protection | News

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Insurance rates sky rocketing despite efforts to improve fire protection

BERWICK, Maine (NEWS CENTER) -- Residents in many communities across the state have experienced sticker shock when they open their home owners insurance policy renewals to find their rates have more than doubled.

There are a variety of reasons that insurance rates have skyrocketed over the past year, said Brad Scott, president of Spencer & Mathews Insurance Company.  The main reason, he said, has been the significant payouts insurers have had to make due to many large-scale natural disasters in recent years.

"The number of these events that have happened in the past decade, and the ferocity of them, has been unprecedented," he stated.  "The insurers have paid considerably more out than they have collected in premiums."

He said another reason rates are through the roof is that the poor economy has prevented people from making repairs to their homes, and that differed maintenance has lead to damage that requires companies to pay for more insurance claims as well.

On top of it all, he said as insurers set their rates, they look at predicted losses, and in doing so, insurers are using technology to more accurately determine the distance a home is from a fire station.

"That's the big, big contributor to having a reasonable rate or an excessive rate," said Scott.

He said if a home is more than five miles from a fire station, the rate could be double that of a similar home less than five miles away from a fire station.

"That could actually result in 40, 50 60 percent more in your home insurance rate," he said.

The rating of fire protection services also plays a role.  The lower the number, he said, the lower your insurance rates.

"If you live in a community that is a nine or even worse a ten, then at that point your homeowner rates can be considerably higher," he said.  "Some of it has to do with the distance to a fire hydrant and how far you are from a fire station.  Some of it has to do with the rating of the overall community, and of course the communities that are better staffed and they have better equipment, they typically have better ratings and those better ratings translate into lower home insurance rates."

Scott has some advice on ways to reduce those premiums.  He encourages home owners to aggressively shop around for different rates, increase the deductible amount to lower their payments, make renovations to improve the safety of the property and even ask the company to pull a new credit score if it has improved over the past several years.