Why Did My Homeowners Insurance Go Up?

Costs are rising in the insurance industry, and you may see the impact in the price of your policy. Here are some reasons why home insurance premiums increase and what you can do to keep your costs under control.

What’s Behind Increases in Homeowners Insurance?

Homeowners insurance rates are climbing for a few reasons:

• Home building materials are getting more expensive. The price of wood, roofing and other materials has been going up. So, insurance companies have to pay more for repairs if you file a claim.
• It’s harder to find skilled labor. There are a lot of openings in the construction field, so your insurer may have to pay more to get people to do the work you need done on your home. 
• Bad weather is striking more often. Wildfires, tornadoes, Derechos and other severe weather events are occurring more than they used to, and insurance companies often have to pay for those costs. These rates are usually adjusted per state, so if you live in a state severe weather or wildfires, you might see a bigger jump in your premiums. Due to increased costs for common occurrences such as fire, theft and water damage, even states without these events are seeing increases. 
• Cost and availability of insurance for insurance companies. The companies that provide a backstop to insurers for large losses and catastrophic events (known as reinsurers) are also reacting to increased storms and building costs. Not only does this increase costs for homeowners insurers, it also means they have to charge more premium to make certain they have the financial strength to absorb losses normally covered by reinsurers. 
• Insurers are paying more in claims than they earn in premiums. According to the American Property Casualty Insurance Association and Verisk, private U.S. property and casualty insurers (companies that insure homes, farms and autos) paid $24.8 billion more out to policyholders in claims than they collected in 2022, and $21.1 billion more than they collected from premiums in 2023. 

How to Lower Your Home Insurance Expenses

Factors like the costs for building materials and labor and extreme weather are out of your control. But there are things you can do to lower your homeowners insurance costs while you keep your home protected:

• Pay all your bills on time. Nearly all insurers utilize a risk score that is based on your credit information to determine your rates. These scores have been found to determine how likely somebody is to file a claim. Although they are completely different than a credit score, paying your bills on time is one common trait among people who are less likely to suffer an insurance claim. 
• Ask your insurance company if they offer a discount for multiple insurance policies. You may save money if you bundle your home and auto. You may also qualify for one deductible, where if one event, like a storm, damages different types of your property, you only pay the deductible once.
• Talk to your agent about life insurance or annuities. These are common types of insurance that every individual or family should consider. Some companies will provide a discount on your home and auto insurance if you use them for your life insurance and/or annuity needs. 
• Find out if you get a discount for living in a new home. Since all of your materials, fixtures and systems are new, your company may provide a discount.
• Roof Replacements. Let your agent know if you have replaced your roof within the last few years, or plan to do so soon. Homeowners premium tends to be lower for newer roofs since they withstand severe weather better, particularly in areas subject to hail damage. If you are replacing your roof, consider materials that are certified as impact resistant as that could result in an even greater discount. Don’t assume the insurance company already knows about your roof age and type, visit with your agent to make certain it is recorded correctly and you’re getting the appropriate discounts.   
• Keep claims to a minimum if you can. Of course, you can’t predict when you’ll need to file a claim. But studies show that people who file a claim are more likely to file additional claims, so insurance companies typically increase rates if you are paid for claims. In many cases, increased premium for a small claim will exceed the actual claim payment in a short period of time. This is another reason to select deductibles at appropriate levels. If you are not going to file a small claim, then you may as well benefit from the higher deductible discounts.
• Select Appropriate Deductible Levels. As the cost of homes increase, you will want to make sure your deductible remains proportionate to control your premium costs.  Insurers typically optimize deductible discounts when they are set at a percentage of the replacement cost of your home. Typically, their target value is 1% to 2% but could be as high as 5%.  Although most insurers require minimum deductibles, determine how much you can set aside to use in the event of a catastrophic loss and adjust your deductible to match that amount. Turning in small claims may not be cost effective as it can increase your premium by more than the claim in a short period of time. Therefore, select a deductible that matches or exceeds smaller incidents that you could afford on your own. 
• Install home protective devices. Protecting your home from break-ins, fires or water damage may lower your rates. Many insurers offer discounts for smart devices such as water sensors as well. 
• See if you qualify for a loyalty discount. Sticking with the same insurance company may save you money over time.
• Ask your insurance agent about rate changes or coverage restrictions before you install a pool or trampoline or get a pet. These are considered “attractive nuisances” since they draw people — especially children — to your property and put them at higher risk of injury.
• Pay your homeowners premium annually. You may be able to save money by paying your annual premium all at once rather than smaller payments. If your insurance payments go through escrow, make sure they are paying the premium annually. If you make the payments yourself, consider doing so on an annual basis. 
• Take pride in your property. Property in good condition is less likely to result in damaged property when subjected to insured causes of loss. Insurance carriers tend to judge your property by the condition of the siding and paint, concrete around the home, roof, appliances and general appearance. Keeping your property maintained, uncluttered and organized can result in a better rating classification for your home and lower your premium. 

Get Help Managing Your Home Insurance Costs

A Farm Bureau agent can help you understand why homeowners insurance rates are going up and make sure you have the coverage you need. Reach out today for a SuperCheck to review all of the coverage you have in place, how you’re protected and where you might want to make changes.