Similar to why auto insurance rates go up, home insurance increases can be attributed to a variety of reasons due to no fault of the policyholder. Factoring in the economy, increases depend on where you live and who insures you.
Homeowners who have not already noticed a change in their rate can likely expect a modest increase in their next renewal.
Though some increases are unavoidable, there are a few offsets you can explore. Read on to learn more about why home insurance rates rise and what you can do to keep your monthly charge as low as possible while still getting the most from your coverage.
Connect with a AAA insurance agent to discuss coverage options and savings opportunities.
Why Do Home Insurance Rates Increase?
Value of Homes Is Higher
When home values go up, the price of claims go up too. Insurance must rise to meet it.
Homeowners will likely start to see their Coverage A amounts increasing. Coverage A reflects what it would likely cost to rebuild your home at the rate of current construction costs in the event of a total loss. Some people mistakenly compare this to the market value of their home or how their town assesses their home value for tax purposes.
“Those can be very disparate values,” said Jodi DeSantis, vice president of insurance for AAA Insurance. “It’s important to understand that [in order to] have sufficient insurance for your home during a high inflation period like the current environment.”
Find current mortgage rates, speak with an experienced home loan officer, apply for a home loan and save with AAA.
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Inflation is also driving up the cost to repair and rebuild homes, and home insurance prices have to keep pace. In the last five years, construction labor has increased 36.3% while building materials are up 42.7%, according to the American Property Casualty Insurance Association (APCIA).
Storms
Natural disasters and the catastrophic losses they bring are becoming increasingly common. While storms could have an impact on your insurance, it mostly depends on where you live and how likely you are to be affected by them.
What You Can Do
- Homeowners should think about hardening and safeguarding their homes and businesses to stay ahead of potential disasters. Keep up with seasonal home maintenance, such as professional roof inspection, removing dying trees and trimming large branches away from your property, and prepare for the increased risk of perils like flooding.
- Confirm you have enough coverage. AAA’s insurance pros recommend reviewing your policies with an agent at least once a year to make sure they are up to date. It only takes about 15 minutes and it’s free.
- Consider updating your deductibles. If you can afford a higher deductible, it will lower your monthly premium.
- It’s also always a good idea to keep an emergency fund.
Get A Home Insurance Quote
This article has been updated and republished from a previous version.
Marisa is AAA Northeast’s content manager. She’s been writing and editing for more than a decade at AAA, where she’s covered everything from insurance to the region’s top restaurants. A native Long Islander, she’s always up for discovering fun new day trips, drives and restaurants in and around the area. Will travel for food.
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