Homeowners Insurance Costs Continue to Rise
Auto & Home
Here are a few ways to save.
Homeowners insurance premiums are rising along with prices almost everywhere else in the economy. Annual homeowners insurance premiums rose over 14% between 2017 and 2021, at a rate more than double that of inflation, and the trend continues.
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The accelerated rise in home insurance premiums is due to a combination of factors, namely the frequency and severity of natural disasters over the past few years coupled with rising costs to rebuild damaged homes.
Because rates are based on the costs to rebuild homes, they’re impacted by many of the same supply chain and labor shortages we’re seeing elsewhere in the economy. The price of labor climbed sharply due to the pandemic while the cost of materials like lumber continues to rise amid supply chain disruptions. As replacement costs increase, insurance companies find themselves paying out larger claims.
While we don’t have much control over natural disasters or inflation, the Insurance Information Institute recommends some specific actions you can take to lower your insurance premiums:
Opt for a higher deductible. Raising your deductible by $1,000 could save you as much as 25% on your premium. Higher deductibles will result in lower monthly rates, but make sure you can afford to pay more out-of-pocket in the event of an incident.
Bundle your insurance policies. Companies that offer home insurance policies, liability coverage, and auto insurance may offer discounts ranging between 5% and 15% if you purchase multiple policies together.
Retrofit your home. Insurers may lower your premiums if you invest in making your home more disaster-resistant with storm shutters and stronger roofing materials, or update your heating, plumbing and electrical systems. Installing a sprinkler system or burglar alarm could reduce your premium by as much as 20%.
Seek out discounts. You may be eligible for a discount based on your age, employment status, credit score, or an affiliation like yours with the alumni benefits program.
Shop around. Insurers set rates based on a number of factors, and the premium you can qualify for may vary from one insurance company to another. Just make sure the provider you select is highly rated when it comes to servicing claims. Shopping around could save you hundreds of dollars annually.
Source: Insurance Information Institute
