You are not hallucinating it if it seems as though the cost of your homeowner’s insurance goes up each time you renew your policy. Insurance premiums are regularly revised so that they accurately represent the dynamic nature of the risk environment.
The typical premium for homeowner’s insurance has gone up by 59% over the course of the last ten years. The question therefore is why prices are increasing. And is there anything you can do to reduce the cost of your coverage?
Why Have My Rates Increased So Much for Home Insurance?
Your monthly payment is dependent on a variety of things. Some of these are within your control, while others are not. These are the eleven factors that contribute to rising premiums for homeowners insurance.
1. You Submitted an Insurance Claim
If you see an increase in the cost of your insurance, the first place to look is at your past claims. Even a little claim can result in huge premium hikes and can remain on your record for many years. Claims submitted due to events that are not catastrophic tend to have a greater impact on your premiums than claims made due to natural catastrophes. This incorporates things such as:
The flooding was caused by a number of broken appliances and pipelines.
2. Your Homeowner’s Insurance Company Has Too Many Clients in Your Neighborhood
In the event that an insurance provider currently insures an excessive number of properties in your neighborhood, the provider may decide to raise prices in order to reduce the concentration of its business. Again, spreading out risk helps to ensure that the firm will be able to satisfy its claims responsibilities in the event that a widespread disaster strikes, as well as maintain costs at a level that is accessible for homeowners.
3. Your Company Has Made a Number of Payments Regarding Claims
Insurance companies employ the principle of the law of large numbers to reduce their overall risk exposure while also keeping premiums as low as possible. However, if a carrier goes through a year in which the number of claims filed is higher than what was anticipated, the carrier will need to change the premiums it charges to meet the losses and the operating costs. For instance, if your neighborhood was struck by a hurricane the previous year, you should certainly prepare for increased premiums this year.
4. Price Increases
Your homeowner’s insurance premiums could go up if your policy limits are raised to reflect the increased cost of replacing your property as a result of inflation. The national rate of inflation for 2019 was 1.81 percent, however the rate of inflation that affects your home may be higher or lower based on the average cost of building in your area. Your homeowner’s insurance premium will increase in direct proportion to the amount of money required to replace your home.
5. You No Longer Receive Discounts
Examine the details of your newly renewed homeowner’s insurance policy to search for any reductions that could have been overlooked. It is possible that these discounts will be removed from your account, which will result in an increase in the prices that you pay. That can easily be fixed; all you need to do is get in touch with your provider and send in the necessary documentation for the discount.
6. You’ve installed a trampoline or a swimming pool in your backyard.
The people who work in this field affectionately refer to these things as “attractive nuisances.” These are the things in your yard that could cause guests to become injured. Consider things like swing sets, tree houses, trampolines, swimming pools, and slides when thinking about playground equipment. They may even invite people who have no business being on your property, and regrettably, you are liable for accidents sustained by anyone on your property, even if they were not invited there.
7. You Made Some Big Home Improvements
Your home’s value will go up as a result of any changes you make to it, but doing so will also drive up the amount it would cost to replace it. That factor, as you could have imagined, can lead to an increase in the premiums. This is especially true if the renovations add square footage or dramatically improve the quality of a room, such as when you upgrade from cabinets made of particle board to cabinets made of bespoke cherrywood. In this example, the quality of the room has significantly improved. If you file a claim, this will result in a significant increase in the cost to replace them.
8. Your Electrical, Plumbing, and Heating, Ventilation, and Air Conditioning Systems Are Outdated
If you own an older home with obsolete equipment, the cost of your homeowner’s insurance can be higher (or hard to insure altogether). Making improvements to your home’s plumbing, heating, ventilation, and electrical systems can not only make your property more secure, but they could also lower the premiums you pay for your homeowner’s insurance.
9. The Age of Your Roof Is Showing
Your roof shields everything that is beneath it. As it ages, it becomes less effective in performing that task. A roof that is several decades old has a greater risk of developing leaks and being damaged by wind and hurricanes. If your roof exhibits any of the following issues, it may be time to replace it:
a roof that has asphalt or 3-tab shingles and is more than 15 years old.
a roof that has architectural shingles and is over 20 years old.
If it’s more than 40 years old and made of clay tiles, concrete tiles, slate, or metal, it’s considered antique.
a shape similar to a shed or a flat roof and an age greater than ten years.
Shake or shingles made of wood, as well as materials containing asbestos.
10. Your credit rating has been lowered.
Insurers are permitted to consider your credit score as one factor among many others for determining premiums in a number of states, including Florida. Your monthly premiums will be decreased in proportion to the quality of your credit score. If you have a poor credit rating, your insurance rate can go up as a result. The good news is that you may boost your score by making on-time payments to your bills and decreasing the balance on your credit cards (target for utilization of no more than 30 percent!).
11. You Have a New Canine Companion
There is no such thing as a bad dog, however certain breeds are not allowed in certain areas. Your premiums might go up, for instance, if you own a German shepherd, because bite claims are expensive to defend against and someone might get hurt while playing with your dog. In 2021, homeowners’ insurance companies paid out close to $900 million to settle claims related to dog bites.
When it comes time to renew your policy, it can be irritating to realize that the premium has gone up ever-so-slightly, but keep in mind that all providers raise their pricing ever-so-slightly on an annual basis. If you do decide to look about for a new insurance policy, you should make sure that you are not reducing the amount of coverage you have in exchange for a somewhat lower premium.