Around a month before the end of your policy term, your insurance company will send you a notice reminding you that your homeowners insurance is set to renew for another year, along with any changes to your coverage or rates. Most years, rate adjustments are either nonexistent or just small enough for homeowners not to notice. And since most policies renew automatically, renewal often feels like just a formality.
But over the last couple of years, there’s a good chance you’ve looked at your renewal notice only to discover your homeowners insurance rate went up by hundreds or even thousands of dollars. In this guide, we’ll help you understand why this may have happened and what, if anything, you can do to lower your rates.
Why did my homeowners insurance go up?
More extreme natural disasters
Your house is older and due for upgrades
Your insurance score went down
5 reasons your homeowners insurance rates went up
If you renewed your policy just to find out your rates are hundreds of dollars higher than they were last year, you’re probably wondering how this happened. Here are a few of the most common reasons your homeowners insurance rates went up.
1. Record-high inflation
In some cases, your insurer will increase your rates because of something within your control — for example, maybe 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 surging cost of labor and construction materials thanks to supply chain issues and record-high inflation in 2021 and 2022.
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. As rebuild costs continue to skyrocket due to inflation, 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, but the outlook is even more grim in areas that are already prone to natural disasters.
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.
Additionally, in states like California where catastrophic wildfire events are common, construction and labor costs tend to be higher in affected areas due to the increased demand and shortened supply.
So if you live in a high-risk area 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.
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 recently or you filed a claim or two in the last year, that may be the reason your homeowners insurance went up.
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.
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.
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.
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.