If you’re a homeowner, you may have noticed that your insurance rates have been increasing over the past few years. Unfortunately, this trend is unlikely to stop anytime soon. But why are rates going up? The answer is a combination of factors, including increasing materials and labor costs and more frequent natural disasters.
Why did my home insurance premiums increase?
Though you may not have filed a home insurance claim, your insurance rates have likely increased in recent years. This is likely a result of a variety of factors, including:
Increasing Costs of Materials & Labor
Inflation has been an ongoing issue for homeowners in recent years, which has directly impacted home insurance rates. As the overall cost of living increases, so do the costs associated with providing home insurance coverage. This includes the price of materials and labor.
Materials such as drywall, lumber, and asphalt shingles are the main components of most homes, and their prices have increased significantly over the years due to supply chain issues. Insurers consider these materials in their insurance premiums calculations. As the prices keep increasing, so do the insurance premiums. Similarly, insurance companies factor in the cost of labor in estimating a homeowner’s insurance rate. As material prices increase, labor costs follow suit, as contractors demand higher pay for their critical work.
An Uptick in Claims Due to Natural Disasters
The number of claims filed due to natural disasters also impacts insurance rates. Recently, hurricanes and other natural disasters have caused significant damage to homes, increasing the costs of repairing or rebuilding. The cost of building materials and labor increases in the aftermath of a natural disaster, which ultimately affects homeowners’ insurance rates.
The location of your home also impacts your insurance rates. Homes located in riskier areas or areas more prone to natural disasters are charged higher rates. Natural disasters make these areas more susceptible to damage and loss, and the insurance coverage provided will reflect that. Your insurance premiums will be higher if natural disasters frequently occur in your location.
How to Lower Your Insurance Premium?
Although it’s true that you can’t control inflation and rising insurance premiums, there are a few steps you can take to help lower your insurance rates.
Review Your Insurance Policy
Reviewing your home insurance policy and home inventory every year is an important step in ensuring you have the right coverage and aren’t paying for something you no longer need.
Ask Your Agent About Discounts
Be sure to ask your insurance agent about possible discounts you may qualify for, such as loyalty discounts, multi-policy discounts, or safe home discounts. If you’ve had the same insurer for many years, have multiple policies with the same insurance company, or if your home is equipped with safety features like smoke detectors and deadbolt locks, you may be eligible for discounted rates.
Re-Shop Your Policy
Shopping your insurance policy every year is a great way to ensure you get the best rate. Do some research and compare rates from different providers, or use an independent insurance agency, like Insureberry, who will do the shopping and comparing for you.
In conclusion, the increasing cost of materials is a significant factor in driving up insurance rates. As a homeowner, it’s essential to work closely with your insurance provider to understand the impact of the material and labor costs so you can make an informed decision regarding your insurance policy and do what you can to lower your rates.