Why Are Homeowners Insurance Rates So High?

Homeowners are getting squeezed financially from every angle in 2024. From rising maintenance costs, higher borrowing costs and rapidly rising homeowners insurance rates, there’s nothing about homeownership that doesn’t cost more today than it did a few years ago. I’ve watched my own homeowners insurance rates go from $850 to $1800 per year within the last five years. And this is a mild increase compared to some areas of the country.

Read on to learn why homeowners insurance rates are up and how you can try to lower yours with tips from an experienced insurance industry expert.

Why Are Homeowners Insurance Rates Going Up?

Weather

The increasing frequency and intensity of natural disasters and weather events are the prime culprit for higher homeowners insurance rates in recent years, according to Anne Beatty, a licensed insurance agent in Connecticut. “There’s been a huge increase in weather-related claims due to wildfires, tornadoes, hailstorms and floods,” she says.

Inflation

Another factor that drives up rates is inflation. As the cost of building materials rises, this impacts replacement costs, a main determining factor for insurance rates. If it costs more to rebuild your house, it costs more to insure it.

Labor shortages

Another factor in replacement costs is the cost of labor to complete the repairs or rebuild. Labor costs have also risen in recent years, reflected in higher homeowners’ insurance rates.

Factors That Impact Homeowners Insurance Rates

Filing claims

When you file a claim with your homeowners insurance company, this triggers an increase in your premium rate for at least several years. Beatty’s advice? “Don’t file claims for small things,” she says. “Make sure you save your insurance for when you really need it, or you’ll end up paying a lot more each year.”

Neglecting home maintenance

Failing to keep up with maintenance tasks can lead to avoidable damage that can lead to a claim. For example, say you neglect to cut back tree branches overhanging your home. During a storm, the branches damage your roof, and you file a claim for repairs. You may get the claim money, but you’ll pay for it in increased insurance rates for years to come.

Deductible

The deductible is the amount you will contribute in the event of a claim. “If you’re looking to save money on your homeowners’ policy, raise your deductible,” Beatty suggests. “The lower the deductible, the more the insurance company has to pay and the higher your rate will be.”

Location

If you live in an area that is prone to frequent weather events, like near the ocean or in a flood plain, expect this increased risk to be reflected in higher insurance rates.

Tips to Lower My Homeowners Insurance Rate

• Increase your deductible
• Bundle auto and home
• Add fire and burglar alarm systems
• Install storm shutters
• Enroll in automatic payments
• Pay the year in full
• Don’t file claims for minor home damage

FAQ

What is an average homeowners insurance rate?

This will depend on the value of the home. The average insurance rate for a home valued at $200,000 is $1,150, while it’s $1,678 for a home valued at $350,000.

How can I compare homeowners insurance rates?

Beatty recommends using an insurance agent. “They contact different insurance companies and provide you with different quotes,” she says. Another option is to use online tools to comparison shop different insurance providers.

What state has the lowest homeowners insurance rates?

Hawaii has the lowest homeowner insurance rates for 2024, with an average rate of $380 per year for a home valued at $350,000.

About the Expert

• Anne Beatty is a licensed insurance agent in the state of Connecticut. She has over twenty years of industry experience.

Sources

• Forbes “The Average Homeowner Insurance Cost For September 2024.” (2024)