If you own a home you’ve noticed that homeowners insurance premiums have been increasing. It’s actually happening across the US and with every carrier.
In the video we explain why we are all seeing increases in homeowners premiums.
5 reasons your homeowners insurance rates went up
If you’re one of the 90% of homeowners who renewed your policy just to find out your rates are hundreds of dollars higher than they were last year, you’re probably wondering how this happened. [2] Here are a few of the most common reasons your homeowners insurance rates went up.
1. Record-high inflation
In some cases, your insurer will increase your rates because of something within your control — for example, maybe your roof needs to be replaced or you filed a claim recently. But the fact of the matter is home insurance premiums are going up everywhere due to the surging cost of labor and construction materials thanks to supply chain issues and record-high inflation in 2021 and 2022.
Your rates are based heavily on how much dwelling coverage is in your policy — this is the part of your home insurance that pays to rebuild your home if it’s damaged or destroyed. As rebuild costs continue to skyrocket due to inflation, homes are requiring higher dwelling coverage limits to keep up with the rising prices.
This has led to higher home insurance rates across the board, but the outlook is even more grim in areas that are already prone to natural disasters.
2. More extreme natural disasters
From worsening hurricane and wildfire seasons to unexpected cold snaps in Texas, the home insurance industry has experienced record-setting claim payouts and financial losses over the past few years. As a result, many insurance companies are increasing rates to pay for these losses and to ensure they don’t go bankrupt after future climate disasters.
Additionally, in states like California where catastrophic wildfire events are common, construction and labor costs tend to be higher in affected areas due to the increased demand and shortened supply.
So if you live in a high-risk area out West or in the South and your rates recently went up, you’re likely getting hit by both price inflation and the higher reconstruction costs where you live.
3. Your house is older and due for upgrades
Some of the most common home insurance claims are due to water damage after a burst pipe or roof leak. These are also among the most expensive types of home insurance claims. If your insurance company conducts an inspection at renewal and discovers your roof needs to be replaced or you need new plumbing or electrical work, it may increase your rates to account for the high risk of claims.
Average cost of home insurance by roof age
Here’s the average annual cost of home insurance in the U.S. in 2022 based on the age of your roof:
| Age of roof | National average rate |
|---|---|
| New roof | $1,739 per year |
| 10-year-old roof | $1,859 per year |
| 15-year-old roof | $1,898 per year |
| 20-year-old roof | $1,913 per year |
Methodology: National average rates are based on our analysis of home insurance premiums provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C. for policyholders with different aged roofs.
4. Your insurance score went down
Another factor that determines your home insurance rates is your insurance score, which measures how statistically likely you are to file a claim. Carriers typically determine your insurance score by combining your credit score and claims history, among other factors.
A lower insurance score generally means higher premiums, so if your credit took a dip recently or you filed a claim or two in the last year, that may be the reason your homeowners insurance went up.
Average cost of home insurance after you file a claim
Here’s the average annual cost of home insurance in the U.S. in 2022 based on different claims histories:
| Number of claims | National average rate |
|---|---|
| 0 claims | $1,933 per year |
| 1 claim | $2,101 per year |
| 3 claims | $2,916 per year |
| 5 claims | $4,407 per year |
Methodology: National average rates are based on our analysis of home insurance premiums provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C. for policyholders with different claims histories.
5. Attractive nuisances
Insurance companies consider swimming pools, trampolines, and even house pets as “attractive nuisances” since they attract children onto your property and put them at risk for injury. If you install a pool or add a new four-legged friend to your family, your insurance company may increase your rates to offset the higher probability of expensive liability claims.
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