It’s tough to get a break on homeowners’ insurance costs. During the pandemic, prices soared as home listings were in short supply. Inflation and supply chain issues pushed up building costs. Now, insurance rates are skyrocketing. What is causing this upward trend?
Homeowners’ insurance costs are breaking the bank.
Why do homeowners’ insurance costs keep rising? Several factors have come together to create the perfect storm, literally:
- Hurricanes that devastated parts of the Southeast and wildfires out West have caused the number of claims to skyrocket. Increased catastrophes escalate risk and rates.
- Insurers withdrawing from disaster-prone areas causes a shortage of available coverage. Fewer insurance carriers in a region mean those that remain shoulder more risk, raising rates.
- Though inflation has abated somewhat since 2021’s peak, building material costs are still the highest in decades.
- A labor shortage in the building trades has extended construction timelines and caused wages to increase.
Are you powerless?
Although each factor is beyond our control, you can minimize the impact with your own decisions.
- Shop insurance rates each year. It never hurts to see if you can get a better deal. Make sure you compare apples to apples with the same deductible, coverage amounts, property valuation, etc.
- Take a higher deductible. Use the difference in premium costs to set aside savings to “self-insure” for the deductible that might come when a claim happens.
- Bundle your home, auto, and umbrella coverages with the same company, and you’ll receive a discount on each line of insurance.
- Keep your home well-maintained. Add “hurricane straps” to your roof structure and storm windows if you live in a hurricane-prone area. Keep your brush cleared around your house in wildfire-prone areas to remove potential fire fuel. Document these steps for the insurance carrier to get a break on your rate.
- Maintain good credit by keeping your debt low and making on-time payments. Insurance companies consider credit scores an indicator of a person’s risk profile.
You can’t control the external factors, but what you can control makes a difference.
Related – Finding Ways to Save on Homeowners Insurance
