Homeowners face rising insurance premiums

May 17, 2011 04:21PM

Despite double-dipping home values, insurance premiums are poised to increase nationwide, and in many case, they already have. According to the Wall Street Journal, some of the largest insurance companies in the country say they either have or will be raising rates after five years of stability. Premiums, they say, are based on the estimated cost of rebuilding a home — not on its current market value. So although Americans are still battling falling home prices, the cost of gasoline has risen 37 percent over the past year, while cooper and plywood now cost 20 percent or 8 percent more, respectively. According to the Insurance Information Institute, which tracks the insurance industry, the cost of homeowners insurance rose to an average of $807 last year, up from $791 in 2008. State Farm Mutual Automobile Insurance said it raised rates for homeowners by 7.3 percent on average last year, while PURE Risk Management increased rates by 11 percent this year in Florida. Analysts also expect more increases in the future, thanks to a wave of recent natural disasters and new risk models. [WSJ]