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NJ Homeowners Insurance Costs Rising For Primary And Secondary Homes

By Mike Heuer

Many homeowners in New Jersey never experienced flood damage or thought it was something against which they needed insurance protection until the deadly Hurricane Sandy struck in 2012 and damaged or destroyed tens of thousands of homes and other properties. Now, many who were able to rebuild or are in the process of rebuilding are seeing steep rises in their NJ homeowners insurance rates as well as flood insurance.

Worse, those who have second homes are seeing even steeper rises in dwelling insurance costs. Unlike homeowners insurance, which is based on a home being occupied year-round and is less likely to suffer extensive damage from a lingering condition, such as broken water pipes, dwelling insurance is based on a home being only partly used throughout the year and results in typically greater risks of damage or destruction.

On average, NJ homeowners insurance costs about $638 per year, according to the National Association of Insurance Commissioners. But dwelling insurance typically runs about 20 percent higher or more than homeowners insurance rates can cost. That means when rates start to rise, as they are in the aftermath of Hurricane Sandy, there can be a great deal of rate increases for those who own not only a family home but also a vacation home or other property for which they need dwelling insurance.

Nationally, homeowners insurance rates rose by an average of about 5 percent during 2012 to about $1,000 per year, according to the Insurance Information Institute. But those rate increases are higher in areas in which floods, tornadoes and hailstorm damages are great threat. That means many homes in the Garden State are at a high risk of flood damages and, therefore, could see steep rising in homeowners insurance as well as flood insurance rates.

Officials for the National Flood Insurance Program have been increasing rates a great deal for many homes located around the nation, and New Jersey has about 100,000 second homes and even more primary homes located near the Atlantic coast, which was ravaged by Hurricane Sandy in 2012. As a result, residents and owners of secondary homes in those areas could see not only their flood insurance rates but the NJ homeowners insurance and dwelling insurance costs go up sharply.

The rise in homeowners insurance rates won’t be as steep as that for the dwelling and flood insurance plans, but they still represent a potentially steep rise for New Jersey residents and other property owners. The $638 per year paid in homeowners insurance premiums likely will go up quite a bit for property owners, but many will remain relatively affordable since state officials must approve rate increases and take steps to ensure any rate increases are not excessive.

But with rates rising across the nation, it will be harder to keep them from rising as fast in some parts of the state as in others. When rates do rise, homeowners can take some steps to either obtain discounts or shop for more affordable plans.

Bundling of insurance policies with the same insurer typically results in savings of up to 20 percent on insurance policies as does installing sprinkler systems, security systems and other steps that will help limit potential damages.