Homeowners’ insurance rates have been on the rise in recent years.
The Short Version:
- According to a recent report from SafeHome, 43% of homeowners say they have seen an increase in their premiums in the past year.
- One in ten plans to switch carriers in the near future – most of them to combat these rising costs.
- Southerners are especially feeling the strain of insurance costs, as their average annual insurance premiums come in at $1,834; above the national average of $1,584.
- The higher premiums in the south have been largely influenced by hurricane activity.
- The popularity of swimming pools in the warmer southern states also affects premiums.
- The report also partially attributes the rising cost of homeowners’ coverage to houses being larger than they have been in the past.
The High Cost of Homeowners Insurance
According to a recent report from SafeHome, 43% of homeowners say they have seen an increase in their premiums in the past year. One-in-ten plan to switch carriers near-future – most of them to combat these rising costs.
Southerners are especially feeling the strain of insurance costs, as their average annual insurance premiums come in at $1,834; above the national average of $1,584. The higher premiums in the south have been largely influenced by hurricane activity. The popularity of swimming pools in the warmer southern states also affects premiums. The report also partially attributes the rising cost of homeowners’ coverage to houses being larger than they have been in the past.
So what does this mean for you? If you’re a homeowner, chances are your insurance rates have gone up. And if you’re shopping for a new policy, you can expect to pay more than you would have a few years ago. In this blog post, we’ll take a look at some of the reasons behind the rising cost of homeowners insurance and offer some tips on how you can save money on your premium.
Why Homeowners Insurance Rates Are Rising
There are several factors that have contributed to the rising cost of homeowners insurance. As we mentioned earlier, one is hurricane activity. Since 2004, there have been 8 major hurricanes that made landfall in the United States affecting Florida and causing billions of dollars in damage. As a result, insurers have had to pay out more claims, which has caused rates to go up.
Another factor influencing rates is the houses themselves. They’re simply becoming bigger and more expensive to replace. In comparison to the Great Recession lows, the average size of new single-family homes is now 6.3% higher at 2,537 square feet, while the median size is 10% higher at 2,312 square feet. And as prices for building materials continue to rise, so too does the cost to rebuild a home from scratch.
Finally, the amount paid per claim has gone up due to inflation. Construction materials costs are up 17.5 percent year-over-year from 2020 to 2021. The US Census Bureau says that’s the largest year-over-year increase in material costs since 1970. So even if you don’t live in an area prone to hurricanes or other natural disasters and your home isn’t particularly large, you’re still seeing increases in your premium due to inflation.
There’s no denying that homeowners insurance rates have been on the rise in recent years. But what’s causing these increases? In short, it’s a combination of things including hurricane activity, larger homes, and inflation.
Unfortunately, there’s no one silver bullet solution that will help lower your premium. However, there are a few things you can do to try to offset some of these costs such as increasing your deductible or bundling your policies with one carrier.
We know that finding ways to save money is important, so we’re here to help. Talk with us about your options for lowering your rate without sacrificing coverage. We may be able to find a policy that fits your needs and budget.
