Why did my homeowners insurance rates go up?

At the end of your policy period, it is not unusual to find out that your home insurance premiums increase. The amount you paid in the premiums is based in large part on your place of residence, your home age and your insurance score – so that your rate rise can be explained if any of the variables affecting your premiums have changed.

Prices may also be affected, such as developments in the insurance market, by factors entirely uncontrolled. If the number of losses in carriers is reported in a particular year, that affects the industry, and the next year's prices are likely to represent that—usually on the request of reinsurance firms. According to the NAIC report from January 2021, homeowners' insurance rates rose by 3.1% nationally in 2018.

If you'd ask how this has occurred in the past month or year, the uptick in natural disasters could be part of the explanation for this, but there could be other reasons as well — and you can do things to lower your insurance rates again.

Why your homeowners insurance rates went up

You'll probably ask yourself how you did this if you raised your rates after last month's payment, or renewed your policy to find out your premium has increased by $300 more than last year. It is particularly perplexing that you have no history of claims and that your prices have been the same for many years.

1. Construction costs may have skyrocketed

The coverage amounts of your contract usually decide your costs. The reconstruction or residential coverage of your home is an essential determinant of how much you pay in the insurance. The higher the residential cap, the more your premiums are. The prices of local building materials and labour are a central indicator of your home reconstruction rate, and your housing limits will need to be increased if the cost of construction increases. 

Building costs could jump for many reasons—perhaps as a result of the increased demand and supply of a number of weather catastrophes, or perhaps the proposed tariff increase caused a building costs rise. Be sure to review the statement page of your contract — before you adjust coverage, your agent may need to remind you, but they cannot say that your fees are going to increase.

2. Your home is due for upgrades

You will pay your premiums on time and you can not file claims even though it has been the same insurance provider for five years, but when you renew the policy, your insurer will still carry out a home inspection. 

Your inspector will probably perform an outside inspection of your house, which will be closely focused on the roof, exterior walls and the base of your home, at least. You will want to give your inspector a clear time period for making these updates, usually 30 days, if your building is in poor shape and you might use any upgrades. You will see a rate rise in your next bill if you don't upgrade your holiday home.

3. Your insurance score went down

Your insurance ranking, which calculates how statistically likely you are to file claims, is another aspect that influences your insurance rates at home. Carriers usually calculate your insurance value by incorporating different risk factors – such as your loan score, your claim history and your household's safeguards. The lower the value of your insurance, the higher the premium.

Carriers generally allocate policyholders insurance scores during the application process and, when you are up for renewal, check your score and change your rates if needed. Keeping the credit score healthy (above 700) and not making claims is an excellent way to keep the premium and the insurance score low.

4. You or your neighbors file a lot of claims

You can offer your insurer a higher fee on all losses if you have a long history of household insurance coverages depending on your insurer to pay for any small insured loss in your house. On the other hand, your insurer can offer you a lower rate if you never have registered any losses and have clean claims.

How much your neighbours or persons in your ZIP file claims will also affect your prices. If you live in an environment that is constantly burglarized or wild, it does not matter if you have a clean record of allegations – it may raise your premium if people around you do not do so. 

5. You added a pool or trampoline

Swimming-pools, trampolines and swing sets are all regarded in the insurance industry as "attractive nuisances." The increased risk of body damage is considered a safety threat. If you install a pool or trampoline, you would probably have to increase your liability coverage and increase your cost of coverage.

6. The insurance company simply increased rates 

As we mentioned before, prices are on the rise across the industry. It is sometimes solely profitable as shareholders receive such returns from an undertaking in which they have stakes. In recent years, however, the rise can be attributed to industry records and losses — apparently associated with winter storms, hurricanes and wildfires. For example, in 2017, California saw insured losses of $14 billion in wildfires. In 2020, the Midwest suffered a storm of Derecho that caused a loss of property of billions of dollars.

What to do if your insurance rates go up

If your bill has changed, such as a rise in coverage amounts and higher premiums, you must start by calling your insurer and speaking to them about your account. They will probably give you a justification and will propose tangible ways to will your prices and future discounts.

Some reasons why your insurer was out of reach, such as a rise in natural disasters, could offer you. However, you can reduce the premiums in many ways if they go up.

How to lower your homeowners insurance rates

If your prices have recently increased and you wonder if anything can be done, you are not alone, and yes. The measures below are also good starting points but you can also talk to a licensed representative at CompareInsurance about your rate rises, who can help you to understand your bill better and lower the prices.

Step 1: Look for discount opportunities

If you look at the statement page of your contract, you'll see a discount section, which can look at possible discount offers from your insurer if it is more or less empty. You need to expect potential discounts to be offered:

• Multi-policy discount : If you have two or more same insurer plans, such as home, car and life insurance, you can save 20 to 30 percent on premiums from anywhere depending on the insurer.
• Claim-free discount : some carriers give you discounts for claims not to be filed
• Protective devices discounts : When your home comes with deadbolts, smoke detectors, fire-extinguishers and fire alarms that directly notify law enforcement, most insurers will provide you with a pleasant reduction. 
• First-time homebuyer discount : most insurance firms bid new homebuyers discounts
• Senior citizens discount : Your insurer can offer up to 10% off the premium if you are 55 or 60 or older
• Long-term policyholder discount : whether for five years or more you were a policyholder with one insurer, insurers are also offering ten percent discount loyalty.

Step 2: Choose a higher deductible

The lower you can subtract from your policy, the higher you pay, and vice versa. If you are actually paying a deductible of $500 or $1,000 and you have increased your premiums, asking your insurance agent to raise your deductible is a good way to get these down. When you file a claim, you pay your deduction only. If you are a conscientious homeowner who never had to file a claim in the past, it might be a reasonable idea for you to increase your deduction.

Step 3: Disaster-proof your home

If you restructure parts of your house, modernize or winter the electricity and plumbing of your home or install storm shutters or storm proof shingles or a garage door to your home that is resistant to catastrophes, let your insurance companies know – they probably would be a cheaper price to you.

Step 4: Re shop your homeowners insurance

In order that you may not miss a great offer with another insurance provider, you should consider rehoming insurance every year.

You may be eligible to purchase your policy through government services such as your State Fair Access to Insurance Requirements (FAIR) plan if you do not have adequate insurance at home, since you live in a risky location. If you have been through a private insurer, you can pay more for government plans than you will, so be sure to check with the agencies in your region to see if they have similar – but cheaper – programs.