My Homeowners Insurance Just Doubled – What Should I Do Now?

If you’ve received your homeowners insurance renewal notice and are unpleasantly surprised at how expensive it is, you’re not alone. Home insurance premiums rose an average of about 13% last year and are expected to rise another 7% in 2023. And that’s just the average — many homeowners are growing even more

I am one of them. In fact, my homeowners insurance premium is approx double For the past two years, I have just received my renewal notice in the mail. So, if you’re in the same boat as me, here’s why your premiums have gone up so quickly and what you can do about it.

Why are your homeowners insurance premiums rising so fast?

Homeowners insurance premiums typically increase by about 5% per year on average, so recent trends are certainly above normal levels of growth. But it’s not like your insurance company is increasing your premium for no reason. In fact, a few major factors have caused the abnormal increase in homeowners insurance rates.

Inflation

Inflation affects your insurance premiums in a few ways. For one thing, inflation raises insurers’ operating costs, so that gets passed on to consumers. And more significantly, the cost of labor and construction materials has risen dramatically over the past few years. From 2020 to 2022, the cost of residential construction materials has increased by 34%. The biggest determining factor in your premium is usually the replacement cost of your home, so the higher it goes, the higher the cost of insurance.

Natural disaster

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 among the costliest for insurers. Insurers pass these costs on to consumers, which can cause premiums to rise, especially in the worst-hit states. In fact, the Insurance Information Institute projects that premiums in Florida could increase by 40% in 2023, with the effects of Hurricane Ian being the main reason.

of other reasons

In most cases, recent increases in homeowners insurance premiums can be attributed to the inflationary environment or recent natural disasters, but there are other factors that can weigh on your insurance costs.

The age of your home is an example. For example, if your house is 15 years old, the roof is more likely to leak than a 10-year-old house. If you’ve had previous insurance claims, this can also have a big impact on your premium, especially if you’ve had multiple claims in the past few years.

What can you do about it?

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

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

To be sure, given the inflationary environment and the recent wave of natural disasters, you can’t get your insurance premiums as low as they used to — especially if you live in a disaster-prone state like Florida or Louisiana. But comparison shopping for insurance is something people don’t do nearly enough, but if you do, it can be a big money-saver.