You’re probably paying more for your homeowners insurance — a lot more in some cases. In fact, according to a Policygenius analysis of policy renewals from May 2021 to May 2022, nearly 90% of homeowners saw their home insurance premiums increase compared to last year.
The company found that premiums rose by more than 12% on average; Homeowners insurance now costs $1,899 for a policy with $300,000 of residential coverage. And Insurify’s 2023 Insuring the American Homeowner report released this month reveals that home insurance prices will rise 19% in 2022. What’s more, according to the company’s future projections, they predict another 9% climb in 2023
Why increase? Rebuilding homes has become more expensive in terms of claims due to higher material costs and supply chain delays. And an increase in extreme weather due to climate change has led to higher instances of fire and water damage, fueling premium increases.
Should you switch insurance companies to save money?
It’s definitely worth a shot to make the switch and save, say the pros. Ted Olsen, managing director of Goosehead Insurance, says there is a common misconception that when a consumer stays with their current insurer, that longevity means money. “Sadly, the opposite is almost true. Many insurance companies target specific consumer markets and when that consumer keeps the policy forever, even as their profile changes, they move away from that target market and pay more. This is surely in the consumer’s best interest. The interest is finding insurers that fill the sweet spot that they fill,” says Olsen.
Keep in mind that there are no hard and fast rules for how long you’ll stick with one provider, but Olsen says switching every 3 years is the average. “You don’t want to switch too often, because companies look at how long you’ve been with your current provider as one of their factors, and sometimes companies offer annual savings if you keep your policy,” Olsen says.
What to look for in a new homeowners insurance policy
Before switching insurance companies, Quentin Cullen, CEO of Waffle, a one-stop shop for insurance, says it is essential to compare the various insurance options available in the market. “I cannot stress this enough: a cheaper rate is not necessarily a better deal. This is because the coverage, limits and/or discounts for cheaper policies may not be as good as your current one,” says Cullen.
When weighing your options, Coolen says to make sure the company you’re considering is highly rated by third-party sites like Bankrate or NerdWallet, has good customer reviews on third-party sites like the Better Business Bureau, and a good claims track record. should be Evidently on any of the sites mentioned above. “If applicable to your situation, make sure the new insurance coverage meets the requirements under your mortgage, lease or loan, if any,” says Cullen.
Also note that rates change daily. “Home insurance rates change daily, much like car insurance, because financial markets affect the cost of building materials and the labor required to rebuild a home,” says Michael Orefis, senior vice president of operations at SmartFinancial, an insurance marketplace.
It’s also worth having an independent insurance agent help you, says Divya Sangam, LendingTree’s insurance spokesperson. “Professional organizations like Independent Insurance Agents and Brokers of America have searchable directories that will help you see all the independent insurance agents working in your zip code,” says Sangam.
Once you get a new quote you’re happy with, use it as an opportunity to call your current insurance company and ask them if they can do better. “As a customer ready to switch, you now have leverage. Use it,” says Cullen. He notes that it’s also wise to know about the cancellation process, because depending on the type of insurance, there may be a fee for canceling your existing policy. “Before making a decision, make sure the cancellation fee is the new policy. “Do not exceed the savings,” says Cullen