Along with rising prices for food, fuel and other necessities, homeowner’s insurance rates are going up — though not for the reasons you may think. There are ways to protect both your home and your pocketbook, but you need to be proactive.
Homeowners nationwide are seeing increases of 3% to 30% on their premiums. While those numbers reflect the extreme ends of the range, the average premium increase nationwide was more than 12% between 2017 and 2021. Combined with other economic pressures consumers are facing, that rise can be a budget buster for many families.
But Why Is This Happening?
According to analysts, there are three main drivers of premium increases. While inflation is a part of the story, it’s actually not the biggest factor.
1. Increase in natural disasters. The most important part of the story, many analysts say, has been the dramatic increase in losses from natural disasters. Since 1980, insured catastrophic losses (e.g., wildfire, floods and storms) rose 700%. There’s been an increase in the frequency and severity of disasters: more hurricanes, more tornadoes and more fires. And the increase in the number and intensity of natural disasters compounds as more and more people have moved to places at higher risk of those events.
2. Inflation and supply chain pressures. The cost of repairing and rebuilding homes has increased too. Pandemic-related supply chain issues, rising labor costs and general inflation have all combined to make construction more costly. That in turn has raised insurance losses, which has a downstream negative impact on premiums.
3. Fraudulent claims. The industry, especially in certain parts of the U.S., is also seeing large losses due to insurance fraud. The Federal Bureau of Investigation says (non-health) insurance fraud costs U.S. consumers $40 billion annually. And this translates to yearly premium increases between $400-$700 for the average American family. Research from the Coalition Against Insurance Fraud indicates that fraud takes place in approximately 10% of property-casualty insurance losses.
Policy and Pocketbook Protections
A policy is never a bargain if it doesn’t offer adequate protection — and not all home insurance policies are created equal. For example, some include a provision to increase the amount of your coverage to compensate for inflationary increases in the cost to replace your home in case of disaster. This can be called an automatic increase in insurance endorsement or inflation guard provision.
We Insure can help you find a policy that gives you strong protection at an affordable price. So-called “captive” agents, who only have access to a single insurer, can’t shop around to find the coverage that best fits your family, your circumstances — and your budget. By maintaining close ties with multiple top carriers, We Insure does exactly that.
It’s important to know who your carrier is, too. Because a low premium from a poorly rated insurer may not be in your best interest in the long term. When it comes time to pay a claim, you may face long delays and even denial of coverage. That’s why We Insure only works with top-rated carriers. Independent brokers may offer choice, but they don’t have the negotiating power of We Insure. And you can leverage the relationships we’ve built with insurers — and our competitive rates — to save on your coverage.
Go With Those in the Know
In the end, you want to obtain insurance through an agency that will place your policy with a reliable carrier — and one that will not only monitor the carrier’s performance, but also market forces like inflation and help you adjust your coverage accordingly whenever possible. We won’t compromise on making sure you get high-quality coverage at the most affordable rate. We Insure is committed to making sure your policy protects your home along with your pocketbook. And we’ve got the tools and resources to do just that.
Call your local We Insure agent and discover what the “Power of We” can do for you.
The information contained in this page is provided for general informational purposes only and may not be applicable to all situations. WeInsure makes no guarantees of results from the use of this information.