Reasons Why Your Homeowner’s Insurance Rate Went Up
No doubt you have noticed how expensive things are lately. Owning a home has always been a significant expense, but more and more, we are feeling the strain created by rising homeowner’s insurance premiums. You may be asking yourself, “Why is my homeowner’s insurance so expensive?” Well, there are several factors contributing to the rise in premiums.
The Perfect Storm
And by the perfect storm, we do mean catastrophic weather events. They are part of the reason premiums are rising at such an alarming rate. When the weather wreaks havoc, everyone pays.
In recent years, wildfires, earthquakes, hurricanes, droughts, floods, and other disastrous weather events, costing over a billion dollars each, have cost the insurance industry a lot of money. We are all paying the price for that by paying much higher premiums.
Factors Driving Up Insurance Costs
Several factors are coming into play at the same time, creating the perfect conditions for rising insurance rates. Some of the factors causing this perfectly horrible “storm” in the insurance industry are listed below:
- Construction materials costs are inflating at an alarming rate, almost 19% this past year.
- There have been 20+ separate weather events, with damages of over $ 1 billion each.
- Asphalt roofing materials have skyrocketed 16.3% in the last year alone
- As of August 2021, nearly 360,000 construction jobs became available
- The cost of lumber is up by 6.2%
Because of the pandemic, people were at home more than ever. This event caused an uptick in home remodeling and renovations. Paired with supply chain issues all over the globe and the increased demand for new construction, the costs of materials soared. Limited supplies led to more competition when procuring building materials, which ultimately led to inflated prices.
Inflated costs have led to more expensive projects. When homes need repairs following an event covered by insurance, the insurance takes a more significant loss because of these factors. These losses drive up the cost of insurance so that they can cover these increased expenses.
Increased Need for Labor
New homes are in greater demand, which leads to a greater demand for skilled artisans and construction workers. In August of 2021, there was a reported 358,000 job openings. This was twice the number of openings anticipated. Without labor, the jobs take longer to complete, and contractors can charge more for their services because they are so in demand.
This lack of labor is another reason building costs are becoming less and less affordable.
Control What You Can
While you have no control over catastrophic weather events, demand for building materials, supply chain issues, lack of construction workers to meet the demands, and the exorbitant cost of building materials, there are some things concerning your homeowner’s insurance that you can and should control. They are as follows:
- Your insurance agent can inform you of any preventative measures you could take that might discount your insurance. These could be smart home services, smoke detectors, interior sprinkler systems, water sensors, fire alarms, and other home protection services.
- Take a close look at your insurance policy. Inform your agent about any improvements you have made to your home, and check to see if any portions of your insurance policy do not necessarily apply and can be dropped.
- Higher deductibles make for more affordable insurance premiums. If you go this route, you will save money, but make sure you have the amount of your new deductible set aside in case you ever need it.
- Insurance companies often offer discounts if you insure several things with them, they want your business, so they are willing to offer discounts for more than one big ticket item. These items could include homes, cars, boats, second homes, and other valuables.
- Ask your insurance agent about customer retention programs the agency offers. There is a chance you could earn some discounts or credits due to being a loyal customer.
Contact Us for Your Insurance Related Issues
At the Surrano Law Offices, understand the ins and outs of the insurance business and how the rising costs are affecting our clients. If you have an issue with your insurance company or have questions about claims or coverage, reach out to us today so that our knowledgeable team can answer all of your questions.