{"id":34643,"date":"2023-02-06T11:37:35","date_gmt":"2023-02-06T19:37:35","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=34643"},"modified":"2024-08-08T08:44:30","modified_gmt":"2024-08-08T15:44:30","slug":"homeowners-insurance-rate-increases","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/homeowners-insurance-rate-increases\/","title":{"rendered":"What to Do When Your Homeowner’s Insurance Rate Increase"},"content":{"rendered":"

Like many homeowners, you may have recently received an envelope or email informing you that your homeowners insurance<\/a> rate has gone up. Perhaps you received such news with resignation, or perhaps you read the new premium with a knot in your gut.<\/p>\n

Instead, maybe you\u2019re getting ready to buy a home and, after seeing headlines about rising homeowners rates, you\u2019re worried \u2014 wondering how much a policy will cost for your new home and whether there are ways to save money without skimping on protection.<\/p>\n

You\u2019re not alone. According to Policygenius, around 90% of U.S. homeowners<\/a> saw their home insurance premiums increase over the last year. While that may not make the increased expense easy to swallow, understanding why rates have gone up and learning a few ways to mitigate the rising costs may help.<\/p>\n

For a look into the factors driving home insurance rates higher, plus what you can do to help reduce your costs, we\u2019ve gathered research and spoken to several industry experts to share their insights here.<\/p>\n\n\n\n\n\n

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What nationwide factors are driving home insurance rates higher?<\/h2>\n

Increased claims due to severe weather and natural disasters<\/h3>\n

Due to a high number of severe weather events and natural disasters, it\u2019s been an expensive few years<\/a> for insurance agencies. In 2021 alone, U.S. insurers paid $92 billion<\/a> worth of damages due to natural catastrophes.<\/p>\n

Michael Orefice<\/a>, the senior vice president of operations at SmartFinancial insurance portal, points to examples like unusually high rates of wildfires in Colorado and California, Winter Storm Uri in Texas, Hurricane Ida in Louisiana, and Hurricane Ian in Florida. As a result, Orefice adds, \u201cAll insurers are terrified at the devastation severe storms are causing around the country.\u201d<\/p>\n\n\n\n
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In some locations, decreased availability of policies drives up prices<\/h4>\n

Some insurers have pulled out of entire states, specific ZIP codes, or geographic regions where they have incurred too many losses or which they consider too risky. \u201cThere’s been far more natural disasters that have just made a lot of carriers kind of move out of the market\u201d \u2014 especially in California and Florida \u2014 says William Lemmon<\/a>, co-owner and principal broker of Broadway Insurance Services in Los Angeles. \u201cAnd when there’s not as much competition, there’s less number of carriers to work with, and therefore rates just kind of rise based on that.\u201d<\/p>\n

Ron Wadley<\/a>, owner of an independent agency called Insurance for Texans, sees a similar issue in parts of Texas and New Mexico: \u201cWe are absolutely seeing decreased availability. Some of it’s very geographically specific, like in New Mexico, because of the wildfires that they have and the forest fires that they have had.\u201d<\/p>\n

If you are in a high fire line area, he says, now you are likely to have fewer policy options available than before. \u201cI dealt with that on a $2 million house a few weeks ago,\u201d he recalls. \u201cWe really struggled to find them a policy in Texas.\u201d<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Increased severity of claims<\/h3>\n

Not only have insurers received higher numbers of claims, but the costs of the claims have also been elevated.<\/p>\n

\u201cWhen a claim does happen, the cost to either repair or reconstruct a home has gone through the roof,\u201d Wadley explains, \u201cand insurers are paying much larger claim amounts than for the same thing, say, two years ago. Well, insurers don\u2019t just eat those costs \u2014 they pass those on to the consumer.\u201d<\/p>\n

And \u2014 spoiler alert \u2014 as we\u2019ll see, these increased costs aren\u2019t just in the past. Not only do insurance companies need to make up for their recent losses, they now need to increase prices to account for the fact that future losses will be more expensive too. Let\u2019s look at the factors that are affecting these repair\/rebuild costs.<\/p>\n

Increased costs to rebuild and repair homes<\/h3>\n

There are several major factors affecting rebuilding and repair costs nationwide:<\/p>\n