Updated January 30, 2023
Has your homeowners insurance premium gone up? We have been getting a lot of calls lately about the rise in homeowners insurance rates, and want to discuss a few of the factors that are contributing to this increase, and what you as a homeowner might want to do about it.
Inflation and Supply Chain Issues
When determining insurance rates, insurance companies look at a variety of considerations including industry trends. As costs rise across the industry, so do home replacement or repair costs. We have seen a rise across the board for resources like fuel, copper, brass, and lumber. These all play a role in how much it costs to repair or rebuild your home.
Labor strikes, material shortages, and unexpected closures like those resulting from the COVID-19 pandemic all impact the supply chain. Unfortunately, we’re still feeling the reverberating effects of supply chain disruptions. Unavailability of essential building materials and worker shortages both drive up replacement costs.
For example, the cost of wood skyrocketed between 2020 and today. You will likely have replacement cost values factored into your home insurance policy. Home insurance rates increase in relation to the cost to rebuild or replace your home. As the cost of building materials rises, so does the cost to repair or replace parts of your home.
Hurricane Ian, fires and other natural disasters have hit the insurance industry hard in 2022. Even if these natural disasters don’t impact your area, what happens anywhere across the country has the potential to impact rates everywhere.
Insurance premiums are not the only thing you should be paying attention to. With the rising replacement costs, it is possible that your home could be underinsured as well. Keep in mind that if you have made any improvements or additions to your home, you will also want to evaluate your coverage accordingly.
What Can You Do About Higher Homeowners Premiums?
There are a few ways you can take the bite out of higher premiums. Here are a few examples:
- Increase your deductible. Higher deductibles mean lower premiums.
- Have your home and auto policies with the same carrier to take advantage of multi-policy discounts.
- Maintain a good credit score. Insurers are increasingly using credit information to price homeowners insurance policies.
- Investigate other discounts that may be available to you for security systems, fire alarms, or senior discounts.
Contact us for an insurance review so we can help you get the right coverage at the right price.