the main points

  • Homeowners insurance premiums have risen at an unusually fast pace over the past two years.
  • There are some good reasons for the increases, especially in certain regions of the United States.
  • If you’re shopping for insurance, you might be surprised at how much you can save.

If you receive a notice of your homeowners insurance renewal and are unpleasantly surprised at how expensive it is, you’re not alone. Home insurance premiums jumped about 13% on average last year and are expected to rise another 7% in 2023. And that’s just the average — many homeowners are seeing steeper increases.

I am one of them. In fact, my home insurance premiums are approx multiplied For the past two years, according to the renewal notice I just received in the mail. So, if you’re in the same boat as I am, here’s why your premium is rising so quickly and what you can do about it.

Why are home insurance premiums rising so quickly?

Homeowners insurance premiums typically rise about 5% per year on average, so recent trends are certainly above the usual level of increases. But it’s not that your insurance company raises your premiums for no reason. In fact, two major factors have caused the unusually high homeowners insurance rates.

economic inflation

Inflation affects your premiums in several ways. For one thing, inflation makes operating expenses for insurers go up, so this gets passed on to customers. More importantly, the costs of labor and building materials have skyrocketed over the past two years. From 2020 to 2022, the cost of residential building materials increased by 34%. The biggest limiting factor in your premium is usually the cost of replacing your home, so the cost of insurance goes up.

natural disasters

The past few years have brought some costly natural disasters, including Hurricane Ida in 2021 and Hurricane Ian in 2022, and the past few years have been the most expensive of all time for insurance companies. Insurance companies pass these costs on to customers, which can lead to higher premiums, especially in the hardest-hit states. In fact, the Insurance Information Institute projects that premiums in Florida could increase by 40% in 2023 alone, with the effects of Hurricane Ian being the main reason.

Other factors

In most cases, the recent increase in home insurance premiums can be attributed to the inflationary environment or recent natural disasters, but there are other factors that can affect your insurance costs.

Find out: Save on homeowner’s insurance with one of these companies

More: Check out our top picks for homeowners insurance

The age of your home is one example. For example, if your house is 15 years old, it is more likely to have a roof leak than a house that is 10 years old. If you have previous insurance claims, this can have a significant impact on your premium, especially if you’ve had multiple claims in the past several years.

What can you do about it?

The best thing to do if your insurance goes up is to shop around for new coverage. You may be surprised at the range of quotes you can get on the same property from several different insurance companies. An independent insurance agent/broker who can get quotes from many different insurance companies can be a good place to start.

Another strategy is to ask your insurance company what you can do to reduce your premium. For example, some insurance companies offer policy discounts for homes equipped with fire extinguishers and alarm systems. Some will even give you a discount if you collect auto insurance with the same company.

Undoubtedly, due to the inflationary environment and the recent wave of natural disasters, you may not be able to get an insurance premium quite as low as it used to be—especially if you live in a disaster-hit state like Florida or Louisiana. But comparison shopping for insurance is something people don’t do nearly enough, but it can be a huge money saver if you do.

Our picks for the best home insurance companies

There are many home insurance companies to choose from. We’ve researched dozens of options and shortlisted our favourites here. Are you looking for green building discount or easy package policies? Do you want an easy to use interface? Read our free expert review And get a quote today.

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