The rising cost of Homeowners Insurance
Updated: May 13
Our Personal Lines team is dedicated to helping you protecting your homes and secure your future from environmental forces outside of your control. It is essential to know how exactly homeowner’s insurance is priced, the reason behind the inflating costs, and what premium saving options are available. Several market trends have affected these unfavorable changes.
Critical Components to Your Homeowner’s Insurance Premium
Insurance providers look at the insured and their home’s various factors when formulating a premium amount for homeowners’ coverage. Some of these main factors are:
Location and possibility of the home being affected by extreme weather conditions or natural disasters.
The amount and type of coverage selected.
The deductible selected.
The home’s loss control devices such as alarm systems and water leak detection to protect and prevent.
Customer’s claims or bill payment history
Customer’s credit score
Characteristics of the home (such as year built and features)
How long the insured has been a customer to that insurance provider.
Our goal is to ensure the proper coverage is placed to alleviate the burden of having to repair, replace, or rebuild the home in the event of a loss.
Why are premiums for homeowners rising?
According to industry research, there is a national trend in the heightened risk exposures and repair costs that have unfortunately impacted the pricing of homeowners insurance. Moreover, high-valued contents and appliances have increased over 100% when compared to their original purchase, along with increased replacement costs. The COVID-19 pandemic heightened these upward trends and ultimately altering how and where individuals decide to live.
On the other hand, harsh weather conditions and other natural disasters are factors out of our control. Even more storms and natural disasters with more severity are co-occurring, becoming more costly. In 2020, there were a total of 22 national climate events and 30 named storms. These happen to be the highest numbers on record. Year after year, paid water losses are rising at a higher rate than wind and fire. Plumbing supply system failure continues to be the primary source of residential water losses.
Another contributor to the rising rates for homeowners is the material costs climbing dramatically over the last decade. Asphalt roofing materials have increased by 77% since 2008, while metal roofing increased by 31% as of last year.
Homeowners face these challenges and risks they did not see coming, but together we can structure the protection needed to secure their future.
How Homeowners Can Save On Their HO3 Policies
A couple of options are available to homeowners to receive a premium relief on their homeowner’s policy. First, we suggest taking a closer look into different deductible options. It is more than likely you will not experience a loss every year; therefore, the customer needs to consider how much they could pay toward a loss without impacting their lives significantly.
Secondly, homeowners may be eligible for a discount if an installed central station security system can notify the fire department if a fire starts in the home.
As previously mentioned, plumbing failures have proven to be the top cause of residential water losses. Homeowners can receive credit and mitigate their chances by installing a water shut-off device.
Furthermore, insurance companies offer a discount opportunity to save more by combining your home policy with other auto, valuables, and excess liability lines.
Although discounts depend on the state and amount, overall, these discounts and credits can range between 5-10%!