Although not a legal obligation, if you have a mortgage, your lender will insist that you carry home insurance to safeguard its investment. Home insurance is always a good investment, even if you do not have a mortgage. A homeowners policy provides a financial cushion by providing liability and property coverage, which you may later appreciate.
Your insurer will inform you of the adjustments to your policy or prices for the upcoming year about a month before your home insurance renewal. Most years, these revisions are nonexistent or so small that homeowners don’t even notice them. But in 2022, homeowners’ insurance costs increased significantly across the nation.
An assessment of home policy renewals between May 2021 and May 2022 revealed that the average increase in house insurance rates was 12.1%. There was an average rise of $134 for homeowners whose rates soared. Since house insurance continues to be on the list of products with rising prices in 2023, the increase in policy rates is still here with us.
Reasons Why Home Insurance Rates Continue to Increase
In 2023, we will project an increase in home insurance rates for the following reasons.
1. A Continued Rise in Inflation
Inflation hurts the costs of all consumer goods and services, and the insurance industry is no exception. During inflationary periods, the cost of items that impact claims and premiums increases, raising insurance costs.
The amount you pay in premiums depends on the cost of dwelling coverage in your policy. This portion of your homeowners’ insurance covers rebuilding your house in the case of damage or destruction. Homes now require more significant dwelling coverage limits due to escalating prices caused by inflation.
In addition, the COVID-19 pandemic caused disruptions in the supply chain. The geopolitical unrest in Russia and Ukraine also caused a 17.7% increase in building material prices over the years.
A severe labor shortage is also present in the construction sector. By November 2022, there were more than twice as many construction job opportunities as the U.S. Bureau of Labor Statistics anticipated. In the years ahead, this number is only likely to grow.
These factors lead to high home-rebuilding expenses and, as a result, soaring insurance rates for those properties needing replacement.
2. An Increase in Natural Disasters
The most recent in a series of rising natural disasters is Hurricane Ian. Wildfires, cold snaps, frequent hail, and windstorms during the previous few years have all resulted in a rise in insurance claims.
Most insurance companies are raising their premium rates to cover these costs and prevent going bankrupt. The National Oceanic and Atmospheric Administration provided that in 2022, 18 severe natural disasters caused losses worth over $165 billion, an increase of 6% from 2021.
The state of Florida alone suffered $116.7 billion in losses due to Hurricane Ian, which devastated it in September 2022.
Construction and labor rates are generally steeper in states affected by natural disasters, and this is due to increased demand and shortened supply. Such states include Texas, Florida, and California, and they are at high risk of tornado, hurricane, and wildfire destruction, respectively.
So, if you live in any of these high-risk regions, prepare for an increase in your insurance costs. Price inflation and increased reconstruction charges are likely to affect you.
3. Your Home Is Due for Upgrades
At the renewal of your policy, your insurer will carry out an inspection. Should you need new electrical work, roof, or other upgrades, your premiums may increase to reflect the high risk of claims.
Roof replacement is usually expensive. The following factors about your roof will impact your insurance coverage and premiums:
- Age
- Location
- Condition
4. Age of The Roof
How old your roof is, is one of the critical elements that affect your homeowner’s insurance rate. Roofs are expensive to replace or repair, hence affecting the cost of your homeowners’ insurance.
A good roof can last anywhere from 20 to 100 years. Your insurance provider will inspect your roof yearly, regardless of the material or quality of artistry. As your roof ages, your insurance costs will increase, or your coverage will decrease. When a roof reaches the age of 10, you can expect slight changes in your policy, and more significant changes will come after it reaches the age of 20.
Replacement and insurance costs for older roofs are typically higher. As your roof ages, it is more likely to sustain damage, increasing the cost to insurance companies when it needs rebuilding. Sometimes, insurers deny coverage, increase prices, or even discontinue your policy if your roof is years past its anticipated lifespan.
The average cost of homeowner’s insurance by the age of roof in 2022
| Roof’s age | Average yearly expense ($) |
| New roof | 1,739 |
| Ten years | 1,859 |
| 15 years | 1,898 |
| 20 years | 1,913 |
National average rates are based on analyzing the insurance premiums for policyholders with varying roof ages, as given by Quadrant Information Services.
5. Your Home Location
Living in high-risk places like Oklahoma with tornadoes and California with wildfires can impact insurance costs. Insurance firms in these states often demand that policyholders acquire extra coverage for disasters like floods, tornadoes, and hail damage. The increased premiums homeowners pay will cover replacing the roof when catastrophes occur.
6. The Condition of Your Roof
Wear and tear is inevitable. However, keeping your roof in good shape is essential to preserving its integrity and maintaining reasonable premiums.
A standard insurance policy hardly covers damage brought on by negligence and depreciation. You, therefore, need to make an effort to maintain your roof.
Actions You Can Take to Reduce Risk
- Conduct routine maintenance and inspections.
- Determine the ideal age to replace your roof.
- To prevent unforeseen costs or coverage limitations, conduct thorough research before selecting a roofing material.
- So that you understand what to expect, carefully read your insurance coverage.
7. Your Insurance Rating Dropped
Your insurance score indicates the probability that you will make a claim based on statistics. Insurers often use a combination of your credit score and other factors to determine your insurance score.
If your credit score suffered a setback or you made claims in 2022, be ready to pay more for homeowners insurance in 2023. A lower insurance score typically translates into higher premiums.
8. Attractive Nuisances
Insurance companies frequently view amenities like swimming pools and domestic pets as attractive nuisances. These amenities attract children and might put them at risk of harm or home damage.
Home insurance average cost by claim history in 2022
| No. of claims | Average annual cost ($) |
| 0 | 1,933 |
| 1 | 2,101 |
| 3 | 2,916 |
| 5 | 4,407 |
These are national average rates for house insurance premiums based on prior claims as provided by Quadrant Information Services in 2022.
How To Reduce The Cost Of Your Home Insurance
If you notice higher premiums at renewal, get in touch with your insurer and find out more. They will provide you with a justification and may suggest recommendations for reducing your rates.
The following actions are a great start toward saving on your home insurance.
- Inquire About Discounts
Ask whether you qualify for any discounts offered, such as;
- Multi-Policy Discount
Depending on your provider, you might save between 15% and 30% on premiums if you hold more than one policy with them.
- Claim-Free Discount
Some insurers provide discounts to policyholders who go a specific length of time without making a claim.
- Discounts for Safety Features
Most insurers offer lower rates for homes with smoke detectors, deadbolts, burglar and fire alarms, and other safety devices.
- First-Time Homebuyer Discount
Most home insurance companies give discounts to first-time homebuyers and owners of newly constructed homes.
- Loyalty Discount
If you’ve had the same insurer for five years or longer, you may qualify for a loyalty discount of up to 10%.
- Senior Citizens Discount
Policyholders older than 55 may get up to a 10% discount on their premiums.
- Increase Your Policy Deductible
Your homeowners’ insurance premiums will likely decrease if you increase your policy deductible. Consider a higher deductible if your rates rose to bring those costs down again. Choosing a higher-deductible policy can be in your favor. This is especially true if your home poses few risks or if you’ve owned it for some time without making a claim.
- Shop for A New Home Insurance
It would help if you considered shopping around for new homeowners insurance every year to ensure you aren’t losing out on better offers or pricing.
Additionally, during periods of high inflation, customizing insurance coverage is essential. To ensure you are only paying what is necessary for coverage, you must compare costs from as many firms as possible.
If you want to renovate your home for any reason, contact us to assist you in navigating the insurance process and acquiring the coverage you need. We will collaborate with you and your insurer throughout the claims process to determine the best action.
While some firms assist homeowners with the insurance process and others restore damaged homes, our business takes care of everything. From managing insurance company claims, cleaning up after unexpected home damage, and completing remodeling and construction.
