Last year, homeowners all around the country saw their insurance rates go up by hundreds, even thousands of dollars. According to NPR, some saw premiums increase as much as 22%. Why and how does this happen? There is no straightforward answer, so let's explore a few factors that can influence your insurance rates.
Usually, the claims that hold the most sway on insurance rates are the ones related to liability. So, what exactly are high-risk, liability-type claims? The most common high-risk claims include dog bite claims (which represent one-third of all insurance claims), personal injury, water damage, burglary, or vandalism. High-risk claims are typically ones that could have been prevented in some way by the policyholder. On the other hand, naturally occurring incidents or “Acts of God” are not considered to be high risk, as you have no control over their occurrence.
Increased frequency and severity of extreme weather events in a geographical area can lead to an increase in insurance rates in that area. So, you could see an increase in your premiums if your geographic area is hit with storms like tornadoes or hurricanes, whether you personally make a claim or not. Beyond storm claims, a string of fires or burglaries in your geographic region can also have a similar effect on premium rates.
The rising cost of replacing or fixing damaged homes has jumped drastically in recent years. This is because of inflation and the rising cost of materials and services involved at every step of fixing up your home. When the costs of the service go up, so does the financial burden on insurers, which causes insurance premiums to rise across the board. For example, if your roof sustains damage and loses shingles because of high winds storms that affected many homes, insurance companies often will adjust accordingly for inflation and usually end up raising insurance premiums.
In a similar vein to the impact of inflation, labor shortages are another economic factor leading to an increase in insurance premiums––and not just in disaster-ridden geographic areas. Even if a storm isn't big enough to make the news, hailstorms, hurricanes, tornados, and other severe weather storms strongly impact communities locally. In March 2024, there were 274,000 construction job openings––nearly double the number anticipated by the U.S. Bureau of Labor Statistics.
To make matters a bit more complicated, the US has struggled to recover from extensive supply chain issues ever since the pandemic. This only adds another layer to the already complex wrenches that inflation and labor shortages throw into the mix when it comes to repairing property and the rates of insurance premiums.
Pools. Trampolines. Pets. These are all examples of what we call “attractive nuisances.” These bells and whistles may seem fun at face value, but in reality, they can cause high risk and injury for you or your children or could potentially damage your property. Where you see “fun for the family and your guests,” insurance companies see liabilities. Attractive nuisances, even without causing any actual harm, can lead to premium rate increases simply because of their risky nature and potential to cause accidents.
So, with all these external influences in the mix, is there anything you can do to lower your homeowners’ insurance premium? The answer is yes. Keep reading for three quick tips on lowering your insurance premiums.
Basic care like routine inspections, regular gutter cleanings, general maintenance, and upkeep of your home can go a long way in preventing bigger problems down the line. Fewer problems mean fewer insurance claims filed and, ultimately, lower premiums in the long run.
If you shop around, you’ll find different companies offer different deals or discounts when you bundle up on insurance plans. Buying both property and life insurance through the same agency might mean you get to shave off a certain number of dollars from your monthly bill.
If you have the means, making a small change to your current plan can save you money in the grand scheme of things. For example, increasing your deductible by just $500 can save you as much as 20% on your annual premium.
There is a catch, though. By switching to a higher deductible, you risk having to pay more should you need to file a claim. A higher deductible plan might be unwise if you live in an area where storm damage is common. However, if you are confident and willing to take the chance that you might not need to file a claim in a given year, switching to a high-deductible plan could be worth considering.
After years of defending big insurance companies and helping them squash the “little guys’” insurance claims, Chip Lane decided to open his own firm to serve families and business owners needing help with insurance claims. With his years of experience and extensive knowledge of the insurance company’s tactics, he’s able to level the playing field and get claims approved. If you have questions regarding the claims process, please don’t hesitate to reach out; we’re here to help.