When two of the nation's most powerful groups -- dog owners and insurance
companies -- recently collided in the state of Washington it was the insurance
industry that won, defeating legislation that would have prevented it from
establishing higher rates for homeowners with big dogs and dangerous breeds.

Welcome to the new era of homeowner insurance, a time when insurance companies are trying to limit claims, increase exclusions and raise premiums -- all with some reason. 

The National Association of Realtors says that "in the past few years, insurers have experienced a surge in the number and size of property casualty claims from a variety of causes. The property-casualty insurance industry posted a $7.9 billion net loss in 2001, its first-ever net loss."

"The decline of the stock market took (a) toll on insurance companies' investment portfolios," says NAR. "During the 1990s, insurance companies competed with one another by using premium pricing; record stock gains made up for losses in
premiums. Investments have dried up, and loss of that revenue means premiums must increase."

According to the Insurance Information Institute premiums are increasing: Average policy costs for homeowners rose 8 percent in 2002 and such price hikes are not
finished. The Institute also expects that premium costs will increase another 9 percent this year.  There isn't much homeowners can do about declining stock values, but there are ways to get the best possible rates and coverage at the least cost.

Get Enough Coverage
You want sufficient coverage to replace the property in the event of disaster, but how much is enough can be tricky. For instance, new building codes may require different systems and standards than those in place when the property was constructed.
Alternatively, you don't want too much coverage. For example, it's usually held that land is not insurable because it cannot be damaged -- if a house burns down the
property is still there. The bottom line is that you want enough coverage so that
improvements on the property can be replaced at today's prices and with today's
technologies.

Beware of Inflation
Inflation reduces the spending power of cash. Many insurance policies have an "inflation guard" feature so that coverage automatically increases each year with the rate of inflation. However, given that local home prices often rise more than the rate of inflation, it's wise to check policy coverage at least annually.

Don't Push The Limits
It's a common practice for drivers not to make small claims for auto insurance when they have a minor ding or dent. The same theory may well apply to insurance: even small claims require paperwork and payments. Think of insurance as disaster relief and avoid small claims.

Use Care In The Animal Kingdom
Several years ago while at the pound with the children looking for a dog we spotted an especially large, robust creature which, said the cage notice, "eats livestock."
Insurance companies, fairly or unfairly, are backing away from coverage which
involves certain species and breeds. You can pretty much figure that any animal which is poisonous, endangered, illegal to import (think of certain parrots), huge, dangerous or capable of downing a heifer will raise coverage questions.

Prepare For Disaster Repairs
It routinely happens that after a hurricane, earthquake or other local disaster repair costs rise substantially above going rates. One solution is something called "extended replacement cost coverage" which will increase allowable repair payments by as much as 20 percent.