Everything You Need to Know About the Rising Cost of Homeowner's Insurance

Everything You Need to Know About the Rising Cost of Homeowner's Insurance

November 16, 2022

The cost of homeowner’s insurance is on the rise, and it's not looking like it's going to stop anytime soon. This can be a problem for homeowners who have seen their premiums jump by hundreds of dollars over the past few years and are looking for ways to cut back.

Here we will cover some of the main reasons for these increases and how you may be able to lower your rates.

Why Has the Cost of Homeowner’s Insurance Risen So Dramatically?

While the average home value has increased by more than 50% since 2010, the cost of homeowner's insurance has risen even faster, with some states experiencing increases as high as 80%. In addition to this increase in property value, there are more claims being filed each year—which also drives up costs.

The increase in costs may also be due to several other factors, including:

  • Increased frequency and severity of natural disasters such as hurricanes and wildfires.
  • Higher demand for coverage caused by population growth.
  • More frequent theft claims resulting from increasing crime rates in major cities across America.   
  • Increase in lawsuits brought by plaintiffs against insurance companies for failing to pay out claims after a disaster or other event. Insurance companies must comply with these judgments by paying out damages awarded by the judge or court system, which increases their costs and therefore increases the cost of premiums paid by insureds.
  • Changes in how insurers calculate risk from one year to the next based on how many claims were made by policyholders during previous years' seasons (such as hurricane season).

How Rising Costs Affect Different Groups of People in Different Ways

The cost of homeowner's insurance has risen dramatically over the past decade, with some homeowners seeing their premiums increase by as much as 80 percent in just one year.

Rising costs affect different groups of people in different ways—younger people pay more than older people because they tend to live in high-risk areas (such as California or Florida). The elderly are less likely to move and therefore are more affected by higher rates to cover their older homes. Middle-aged people with average incomes currently have the most difficulty finding affordable coverage—a situation exacerbated by the fact that they're often at their most financially vulnerable during this stage of their lives.

Additionally, homeowners who have recently purchased new homes are often hit hardest by drastic rate hikes.

How You May Be Able to Lower Your Insurance Costs

While there isn't much we can do about the rising cost of insurance itself, there are steps you can take right now to lower your monthly payment or even possibly find cheaper coverage altogether.

Here are steps you can take to potentially lower your insurance costs

  • Look for discounts that apply to you, such as bundling homeowners and auto insurance policies together, or having a security system installed
  • Check your credit score – if it's high enough, you could qualify you for a discount on your premiums.
  • Get a home inventory list. This will help track the value of goods in case anything gets damaged or stolen by fire/flood/etc., which can also lower your premiums because insurance companies know how much money they'll be out if something happens at your house (and therefore how much money they need from each policy holder)
  • Work with your insurance agent to find you the best possible rate

Looking to Save on Your Homeowner’s Insurance?

The rising cost of homeowner’s insurance is a major problem that affects millions of Americans every year. The good news is that there are steps you can take to lower your insurance costs.

Interested in learning more about these options that could potentially save you hundreds or even thousands on your homeowner’s insurance? Contact us today to speak with one of our experienced agents.