Homeowner Insurance Rate Hikes May Be Good

[jeffrey]

The good news, the Insurance Information Institute tells us, is that homeowners insurance rates are going up less than 3% this year, the smallest increase in five years.

But if you got sticker shock when you opened your premium notice this year, you're not alone. Some consumers are seeing sharp increases because their insurance companies are ratcheting up estimates of what their homes would cost to replace.

It's a racket, right? Not quite. This may be one of those rare times when you should be grateful to pay more.

Consider the owners of the 3,710 homes destroyed in the 2003 Southern California wildfires. If national statistics hold, two-thirds of those homeowners won't see enough money to pay for full replacement of their homes even if they had "replacement-cost" policies. California's insurance commissioner believes the actual number of underinsured is even higher: 90%... [read more at msn.com]