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As a real estate agent, the more you know the more you can help your clients. The more you help your clients, the more likely they will refer you. Hence, keeping up with all things real estate, including home insurance, is crucial, especially in a state like Michigan, where rising rates are bound to elicit questions.
So, if you’re looking to increase your value as an agent wondering what’s up with the world of home insurance, this is the guide for you. In this guide, we’ll cover everything you need to know about recent market changes and the latest industry trends.
Keep reading for our ultimate guide to home insurance 2024 for real estate agents.
Recently, the National Association of REALTORⓇ’s Magazine published that Michigan was one of the states where home insurance costs are rising. With a projected 14% increase for 2024 and an annual rate of $2,095. So, how can you best explain home insurance costs to your clients? Here are the top home insurance trends and news to know to help.
Whether you believe it’s happening or not, one of the most significant changes affecting home insurance rates nationwide is the rise in premiums due to climate-related risks. Michigan, included. Over the past ten years, Michigan has experienced increased severe weather risks.
In Metro Detroit, heavy rains and storms have increased flooding risk, which is typically not covered under standard homeowners policies. As these events become more frequent, insurance companies will continue to raise premiums to cover the increased risks.
While most standard policies cover wind and hail damage, flood damage requires separate insurance, often through the National Flood Insurance Program (NFIP). Encourage your clients to consider flood risk assessments and factor in additional insurance costs when budgeting for a home.
It should come as no surprise that inflation also affects home insurance rates. A part of insurance policies considers the cost of materials and labor for home repairs that will be covered. The rising construction costs across the board directly impact the amount of coverage a homeowner will need as insurance companies calculate the replacement costs.
In Michigan, where home values have been steadily increasing, replacement cost calculations are an essential consideration for new homeowners.
As an agent, you should ensure buyers understand that home insurance should cover not just the market value of their home but also the cost of rebuilding it in case of a disaster. In many cases, the replacement cost can exceed the home’s market value, especially if material and labor costs continue to rise.
This is particularly relevant for older homes or homes with custom features, where restoration may be more expensive than new construction. Some homeowners may consider a “guaranteed replacement cost” coverage to provide additional protection against rising construction costs.
If you have a high-risk home, the Michigan FAIR plan is designed to provide insurance to those who cannot obtain coverage through the private market. Recently, this plan has been updated to expand its accessibility. As a positive change, it’s now easier to use the FAIR plan to obtain coverage in these high-risk areas.
Remember that the FAIR plan coverage is typically limited compared to standard policies. The policies often come with higher premiums and fewer add-on options. However, as an agent, you can help your client weigh the pros and cons of the policies, ensuring they secure adequate coverage at a cost their budget is comfortable with.
As a driver in Michigan, you already know that auto insurance costs are some of the highest in the nation. So, if you’re assisting new buyers, it’s best to advise them of the benefits of bundling home and auto insurance policies for the best price. With recent legislative changes to Michigan’s no-fault auto insurance system, more homeowners are taking advantage of bundling options to offset rising auto insurance premiums.
As a real estate agent, it’s a good idea to remind clients about the potential savings that come with bundling their home and auto insurance policies. Many insurers offer significant discounts for bundling, which can help reduce the overall cost of homeownership.
As technology continues to evolve, insurance companies are offering discounts for homes equipped with smart technology. Devices such as security systems, water leak detectors, and smart thermostats can reduce the risk of damage and, consequently, lower insurance premiums. In Michigan, where weather-related risks are a concern, homes with smart technology that mitigate these risks are becoming increasingly desirable.
Real estate agents should inform clients that investing in smart home technology can lead to savings on their home insurance. Furthermore, highlighting smart features in listings can make properties more appealing to tech-savvy buyers who are looking for both convenience and cost savings.
While wildfires are not as common in Michigan as in other states, they are a growing concern, particularly in the northern part of the state where forests are dense and dry conditions in summer can lead to increased fire risk. Recent wildfires in nearby states have led insurers to re-evaluate wildfire risks in Michigan, leading to changes in premiums and coverage for homes in high-risk areas.
If you’re working with clients in northern Michigan or areas surrounded by forest, it’s important to make them aware of the potential for increased home insurance premiums due to wildfire risks. Additionally, encourage them to explore ways to mitigate risk, such as maintaining defensible space around their property, which could also help lower their insurance premiums.
If you’ve learned anything in real estate thus far…it’s the fact that everything is always changing. The home insurance and purchasing landscape constantly evolves with new risks, regulations, and technologies.
As a real estate agent, it’s imperative to stay informed to provide value to your clients as they navigate the home purchasing process. By understanding the unique factors, news, and trends affecting today’s home insurance costs, you can better help your clients make informed decisions and avoid unexpected costs down the road.
But you should keep up with every aspect of the industry—not just home insurance. Partner with an educational source, like NCI, to stay in touch with the latest education and resources and stay ahead of your competition.
Explore NCI’s continuing education courses available in a live Webinar format, in-person, and self-paced online sessions, too. No matter the way you learn, NCI supports you and your career. Check out our blog for more recent news, and trends to continue staying up to date or contact us directly to learn more.
However, fulfilling the promise of a successful real estate future requires the right choices at the right times. The most important decision to make right now? Where you’ll begin — or continue — your real estate training. NCI Associates, Ltd. remains your intelligent choice for Michigan Real Estate Classes.
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