By Jenny Callison
Enquirer contributor

Noticed an upsurge in the cost of homeowners insurance recently? The rise took many people by surprise, because insurance rates had remained constant for a period of several years. Unfortunately, rate increases are expected to continue in 2003 and beyond.

The reasons for rising rates are many: a flood of catastrophic losses, increased costs for repairs and replacements, the continued aging of U.S. housing stock and the emergence of claims for mold contamination.

Robert P. Hartwig of the Insurance Information Institute said mold claims cost home insurers more than $1 billion in 2001, a five-fold increase over 2000. He also cited an increase in both the frequency and severity of catastrophes during the 1990s. Those included Hurricane Andrew and the Northridge, Calif., earthquake along with wildfires, floods, tornadoes and other weather-related disasters.

Even though catastrophic damages occur in every part of the country, mold claims have become the major cost driver in some states. Large jury awards to property owners have fueled the trend.

"In 2001 alone, homeowners insurers paid out $8.9 billion more in losses and expenses than they received in premiums, the second worst year on record," Hartwig writes.

Said Brian Maze, spokesman for State Farm Insurance Ohio headquarters in Newark: "As of last year, we were paying out $1.23 in expenses for every premium dollar we took in. We've not had a profitable year for our homeowners segment since 1987 or 1988."

Homeowner rates rose an average of 9.5 percent in 2002; industry officials expect a similar increase this year.

"Some insurance companies have seen more dramatic increases, but based on what we've seen, a 91/2 percent increase for 2003 would be a reasonable national estimate," said Mitch Wilson, spokesman for the Ohio Insurance Institute. "In Ohio, we anticipate a 16 percent increase."

What can homeowners do to minimize the impact on their wallets?

Here are some tips from the Ohio Insurance Institute and Bottom Line, a consumer-oriented Web site.

• Shop around for insurance. Contact several agencies and insurers to discuss coverage, costs, claims handling and service. Provide identical information to each so you'll get a fair comparison. Then check out each company's financial ratings to determine its stability. Ask friends and family for recommendations. Surf the Internet for company information.

• Protect your home inside and out from possible trouble spots.

That means keeping fire extinguishers at the ready; removing dangerous tree branches; maintaining appliances, furnaces and fireplaces as well as your roof, downspouts and gutters; replacing old wiring; making sure walkways, steps and railings are safe; and discouraging crime with good locks and security lighting.

• Ask your insurance company about available discounts for multiple policies, new construction, monitored security systems and for longevity - an incentive for you to remain with your current insurer.

• Raise your deductibles. By increasing the amount you pay at the time of a claim, you become responsible for smaller losses. While this may mean that you shell out for some repairs and replacements, it will lower your annual premiums and reduce the number of claims on your record.

• Check on group coverage possibilities. You may be eligible to join with work colleagues, your alumni associates or a business/trade group to negotiate package rates that will be more favorable.

• Don't over insure. The cost of your land is included in your home's market value, but don't factor its cost in to your insurance purchase.

• Choose guaranteed replacement cost. This policy pays to replace damaged property or loss regardless of its age and condition, with materials of similar kind and quality. It's a better value long term than an "actual cash value" policy, which pays depreciated value.

• Keep your credit record clean. Insurance premiums are based increasingly on the policy holder's credit rating.

• If you're in the market for a house, check its insurance claim record by asking the sellers to get a copy of their comprehensive loss underwriting exchange (CLUE) personal property report. Such a report is available through ChoicePoint and costs $12.95. Contact ChoicePoint at (866) 527-2600 or www.choicetrust.com.

Another thing that Tristate homeowners can do is be grateful that their homeowners policies are relatively affordable. Even with the projected 16 percent rate increase, Ohio insurance rates should still be at or near the bottom of U.S. averages, Wilson said. Current industry figures rank the Buckeye state 50th out of the 51 states and Washington, D.C., in home insurance premiums. Kentucky ranks 36th, and Indiana ranks 41st.

Want more information? Visit the Ohio Insurance Institute Web site or the Insurance Information Institute Web site.

E-mail jcallison@cinci.rr.com