Around a month before homeowners insurance renewal, your insurer will notify you of any changes to your coverage or rates for the coming year. Most years, these changes are either nonexistent or just small enough for homeowners not to notice. But in 2022, homeowners in every part of the country saw their insurance rates go up by hundreds, even thousands of dollars in certain states.
In fact, home insurance premiums were up an average of 12.1% last year, according to a Policygenius analysis of policy renewals from May 2021 to May 2022. [1] For homeowners whose premiums went up, the average increase was $134. In this guide, we’ll help you understand why this may have happened, share insurance rate predictions for 2023, and what you can do to lower your premiums.
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Home insurance rate predictions for 2023
While inflation is expected to decline from 2022 to 2023, it still remains higher than historical averages — meaning homeowners will continue to see an impact on their insurance premiums this year due to above-average construction costs. [2] Add to this the continuing labor shortages in the construction industry, and home insurance rates likely won’t be going down in 2023. [3]
This rings especially true for homeowners in states at high risk of costly natural disasters, like those in hurricane-prone Florida and wildfire-ravaged California. As it becomes increasingly more difficult for homeowners in high-risk areas to find coverage on the traditional market, S&P Global is predicting an increase in policies through excess and surplus (E&S) insurers in 2023. [4]
E&S insurers are able to offer coverage to high-risk homeowners since they’re not part of the admitted (AKA traditional) insurance market. This means they don’t have to run policy forms or rate increase requests by their state’s department of insurance. In turn, they can take on more risk — and charge higher insurance premiums to offset that risk.
Why did my homeowners insurance go up?
Continued inflation going into 2023
More extreme natural disasters
Your house is older and due for upgrades
Your insurance score went down
Attractive nuisances
5 reasons your homeowners insurance rates went up
If you're one of the 90% of homeowners who renewed their policy last year just to find out your rates increased by more than $100, you’re probably wondering how this happened. [5] Here are a few of the most common reasons your homeowners insurance rates went up.
1. Continued inflation going into 2023
In some cases, your insurer will increase your rates because of something within your control — like if your roof needs to be replaced or you filed a claim recently. But the fact of the matter is home insurance premiums are going up everywhere due to the increased cost of labor and construction materials thanks to supply chain issues and record-high inflation that started in 2020.
Your rates are based heavily on how much dwelling coverage is in your policy — this is the part of your home insurance that pays to rebuild your home if it's damaged or destroyed. Higher rebuild costs due to inflation means homes are requiring higher dwelling coverage limits to keep up with the rising prices.
This has led to higher home insurance rates across the board, though there may be some hope on the horizon.
According to the U.S. Bureau of Labor Statistics, the rising cost of construction materials we saw over the last three years is finally beginning to taper off:
Material goods for new residential construction only increased 4% in 2022, compared to 20% in 2021. [6]
Asphalt roofing materials only increased 6% over the last year, compared to 15% in 2021. [7]
Lumber and wood was down 42% over the last year. [8]
However, the labor shortage in the construction industry continues to remain a problem for insurers — and in turn, homeowners. There were 388,000 construction job openings as of November 2022 [9] — over twice the number expected by the U.S. Bureau of Labor Statistics. [10]
2. More extreme natural disasters
From worsening hurricane and wildfire seasons to unexpected cold snaps in Texas, the home insurance industry has experienced record-setting claim payouts and financial losses over the past few years. As a result, many insurance companies are increasing rates to pay for these losses and to ensure they don’t go bankrupt after future climate disasters.
Just in 2022, the National Oceanic and Atmospheric Administration reports 18 costly natural disasters resulted in over $165 billion in losses — up 6% compared to 2021. [11] Florida alone accounted for $116.7 billion of those losses due to Hurricane Ian that pummeled the state in September 2022.
In states like Florida, Texas, and California that are at high risk of hurricane, tornado, and wildfire damage respectively, construction and labor costs tend to be higher in affected areas due to the increased demand and shortened supply.
So if you live in one of these high-risk areas out West or in the South and your rates recently went up, you’re likely getting hit by both price inflation and the higher reconstruction costs where you live.
3. Your house is older and due for upgrades
Some of the most common home insurance claims are due to water damage after a burst pipe or roof leak. These are also among the most expensive types of home insurance claims. If your insurance company conducts an inspection at renewal and discovers your roof needs to be replaced or you need new plumbing or electrical work, it may increase your rates to account for the high risk of claims.
Average cost of home insurance by roof age
Here's the average annual cost of home insurance in 2022 by roof age.
Age of roof | Average annual cost |
|---|
New roof | $1,739 |
10 years old | $1,859 |
15 years old | $1,898 |
20 years old | $1,913 |
National average rates are based on our analysis of home insurance premiums provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C. for policyholders with different aged roofs.
4. Your insurance score went down
Another factor that determines your home insurance rates is your insurance score, which measures how statistically likely you are to file a claim. Carriers typically determine your insurance score by combining your credit score and claims history, among other factors.
A lower insurance score generally means higher premiums, so if your credit took a dip or you filed a claim or two in 2022, that may be the reason your homeowners insurance went up.
Average cost of home insurance after you file a claim
Here's the average annual cost of home insurance in 2022 by claim history.
Number of claims | Average annual cost |
|---|
0 claims | $1,933 |
1 claim | $2,101 |
3 claims | $2,916 |
5 claims | $4,407 |
National average rates are based on our analysis of home insurance premiums provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C. for a sample homeowner with 0, 1, 3, and 5 previous claims.
5. Attractive nuisances
Insurance companies consider swimming pools, trampolines, and even house pets as “attractive nuisances” since they attract children onto your property and put them at risk for injury. If you install a pool or add a new four-legged friend to your family, your insurance company may increase your rates to offset the higher probability of expensive liability claims.
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My home insurance rates went up. What do I do now?
If you notice an increase in coverage amounts or higher rates on your insurance policy at renewal, contact your insurance agent and ask about the changes. They’ll most likely give you a reason and may suggest tangible ways to lower your rates, including increasing your deductible or checking to see if you’re eligible for any discounts.
3 ways to lower your homeowners insurance rates
If you noticed your home insurance rates went up recently and you’re wondering if there’s anything you can do to get them back down, you’ll be relieved to hear that yes, there is.
Following the steps below is a good starting point as you look for ways to save on homeowners insurance.
Ask about discounts
If the discounts section on your policy’s declarations page is more or less empty, make sure to ask your insurance company if there are any you are currently eligible for. Some popular discounts include:
Multi-policy discount: If you have two or more policies with the same insurer, like home and auto insurance, this can trim anywhere from 15% to 30% off premiums, depending on your insurer.
Claim-free discount: Some carriers will provide discounts if you go a certain number of years without filing a claim.
Protective devices discounts: If your home is fitted with deadbolts, smoke detectors, fire extinguishers, fire and burglar alarms, or other protective features, most insurers will reward you with lower rates.
First-time homebuyer discount: Most home insurance providers offer discounts to both new homebuyers or owners of recently built homes.
Senior citizens discount: If you’re 55 or 60 and older, your insurer may offer up to 10% off your premiums.
Loyalty discount: If you’ve been a policyholder with the same insurance company for five years or more, you may be eligible for a loyalty discount of up to 10% off.
Increase your deductible
Increasing your policy deductible generally lowers your home insurance premiums. If your rates recently went up and your deductible is currently set to $1,000, consider choosing a higher deductible to get those rates back down. If your home doesn’t face many hazards or you’ve owned your house a while without having to file a claim, then it may be in your best interest to choose a high-deductible policy.
Re-shop your homeowners insurance
You should consider re-shopping your home insurance every year to make sure you aren’t missing out on better coverage or rates with a different insurance company. Policygenius makes it easy to compare affordable home insurance options from multiple insurers — all for free.
We don't sell your information to third parties.
Frequently asked questions
Why did my homeowners insurance go up in 2021?
There are a laundry list of reasons your home insurance premiums went up in 2021, but the main culprits of last year’s rate hikes were rising labor and construction costs, supply chain issues, and the omnipresent threat of climate change.
Why are my home insurance rates going up in 2022?
Home insurance premiums are continuing to go up in 2022 for many of the same reasons we touched on for 2021. Insurance companies are increasing rates to make up for billions of dollars in losses due to worsening climate disasters, and surging inflation means homes require more dwelling coverage to pay for rebuild costs. The combination of these factors has resulted in some fairly drastic rate increases in 2022.
Why is Florida homeowners insurance going up?
Florida homeowners insurance has always been relatively expensive due to the state’s high hurricane risk. But rates in the Sunshine State have skyrocketed over the last couple years for several reasons, including rising inflation, supply chain disruption, and billions of dollars in losses due to lawsuits over fraudulent roof damage claims. To make up for the latter, insurance companies are passing these losses off to Florida residents in the form of rate hikes.
