Why Homeowners Insurance Premiums Are Rising and What You Can Do
Most people can expect their homeowners insurance rates to go up this year — along with the cost of materials and supplies — in this economy.
Several factors are behind the rising rates. Increasing frequency of severe weather events are causing more serious damage and more costly insurance claims. The rising cost of building materials, supply chain issues and unfilled jobs due to COVID-19 disruptions are driving up the costs of home repairs.
In this article, we’ll explain some key factors causing home insurance rates to rise and what you can do to help rein in your costs.
What Are Some Key Factors Driving Up Home Insurance Rates?
Extreme Weather Events and Catastrophes
Hurricanes, floods, droughts, wildfires and other severe weather events have become more frequent, destructive and costly. In 2021 alone, the United States sustained 20 weather events with losses exceeding $1 billion each. As weather-related damages go up, so does the cost of insurance overall. Insurers typically adjust rates on a state-by-state basis based on actual and anticipated weather-related losses.
Rising Material Costs
Another key consideration when pricing homeowners coverage is the cost to repair or rebuild a home in the event of a loss. These costs have risen significantly during the pandemic because of:
A general increase in demand for home renovations.
A general increase in demand for new construction.
Supply chain disruptions in the United States and around the world.
These factors combined have led to limited supplies and inflated prices for most building materials. Consider this sampling of price increases as of October 2021:
Material goods for new residential construction are up 18.6% over the past year.
Lumber and wood products are up 6.2%.
Asphalt roofing materials are up 16.3% over last year.
As building costs go up, so does the cost to repair or replace homes damaged by covered losses.
Job Openings in Skilled Labor
New home and renovation projects may be surging, but the construction industry is facing a skilled labor challenge. The sector had 358,000 job openings as of August 2021, more than twice the projected number of annual openings.
Factors Impacting Your Homeowners Rate You May Be Able to Control
Current market conditions that affect your insurance premiums may be out of your control, but there are steps you can take to help keep the cost of your homeowners coverage in check.
Take steps to prevent losses. Be sure to check with us about any savings you might qualify for as a result of the preventative measures you take.
Make sure all home improvements are accounted for. If you’ve recently replaced your roof or have made significate improvements let us know. Discounts may be available.
Increase your deductible. A higher deductible will likely reduce your premium. Just remember to have enough savings to cover your deductible should you experience a loss.
Bundle your coverage. Home and auto are commonly bundled for a discount, but discounts may also apply to boat, valuables and personal umbrella protection and other specialty coverages.
Look for customer retention programs. Carriers can offer premium discounts, or credits to long-term customers.
These trends won’t stop us from our commitment to you. Our renewal processes will assure that you have the best coverage at the most competitive pricing. We have the best technology and the best people working for you.
Our Renewal Processes… CLICK HERE
Dan Zeiler
dan@zeiler.com
877-597-5900 x134