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Understanding the Reasons Behind Skyrocketing Homeowners Insurance Rates

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Understanding the Reasons Behind Skyrocketing Homeowners Insurance Rates


If you’re a homeowner, you may have noticed a significant increase in your insurance premiums lately. You’re not alone. Many homeowners across the country are facing higher rates due to various factors, such as inflation, natural disasters, and aging homes. Keep reading to learn why your homeowners insurance may have doubled and what you can do to lower your costs.

Increased Home Values

The value of real estate has been on an upward trajectory in many areas, which directly affects homeowners insurance rates. Insurance coverage is typically based on the estimated cost of rebuilding a home in the event of a total loss. As property values increase, the cost to rebuild or replace a home also rises, leading insurers to adjust premiums accordingly.

Inflation & Rebuilding Costs

One of the main reasons your homeowners insurance may have gone up is inflation. Inflation affects the cost of labor and materials, which in turn affects the rebuild cost of your home. The rebuild cost is the amount it would take to rebuild your home from scratch if it was completely destroyed by a covered peril, such as fire or a windstorm. Your homeowners insurance policy covers the rebuild cost of your home, not its market value.

According to a Policygenius analysis, the cost of residential construction materials increased by 34 percent from 2020 through 2022. This means your home may require more dwelling coverage than before to account for the higher rebuild cost. As a result, your insurance company may have raised your premiums to reflect the increased risk.

Natural Disasters & Claims

Another reason your homeowners insurance may have doubled is natural disasters. The past few years have seen some of the most costly and devastating natural disasters in history, such as Hurricane Ida in 2021 and Hurricane Ian in 2022. These events have caused billions of dollars in damage and claims for insurers, who then pass on some of the costs to their customers.

If you live in an area that’s prone to natural disasters, such as hurricanes, wildfires, floods, or earthquakes, you may have seen a higher increase in your premiums than other homeowners. This is because your homeowners insurance company considers you to be at a higher risk for filing a claim. You may also have to pay extra for additional coverage or endorsements that aren’t included in a standard policy, such as flood insurance or earthquake insurance.

Aging Homes & Upgrades

As your home gets older, it may need more repairs and maintenance to keep it in good condition. Some of these repairs may be required by your insurance company to avoid potential hazards, such as faulty wiring or plumbing. If you don’t make these repairs, your insurance company may cancel your policy or increase your premiums.

On the other hand, if you make upgrades to your home, such as adding a new roof, kitchen, or bathroom, you may also see an increase in your premiums. This is because these upgrades increase the value and rebuild cost of your home, which means more coverage is needed. However, some upgrades may also lower your premiums if they reduce the risk of damage or theft, such as installing a security system or fire sprinklers.

How to Lower Your Homeowners Insurance Costs

If you’re unhappy with your current homeowners insurance rates, there are some steps you can take to lower them. Here are some tips:

  • Shop around for quotes from different insurers – You may find a better deal with another company that offers similar coverage and service.
  • Bundle your policies with one insurer – You may get a discount if you buy more than one type of insurance from the same company, such as auto and home.
  • Increase your deductible –By choosing a higher deductible, you can lower your premiums, but make sure you can afford it in case of a claim.
  • Ask for discounts – You may qualify for discounts based on various factors, such as being a loyal customer, having a good credit score, or having no claims history.
  • Review your coverage regularly – You may be paying for more coverage than you need or missing out on coverage you need. Make sure your policy reflects the current value and condition of your home and belongings.

For information on choosing affordable homeowners insurance that suits your needs, call on the experienced agents at Altra Insurance Services. In addition to homeowners coverage, we offer a variety of reliable insurance products, including business, renters, and auto insurance National City. Call us today at (619) 404-6311 to learn more about our high-quality service and affordable coverage.

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