Why Is My Homeowners Insurance So Expensive?

Inflation and natural disasters have increased the price of home insurance premiums across the country, but you can still find ways to save.

Joe Dyton
Written byJoe Dyton
Joe Dyton
Joe DytonInsurance Writer

Joe Dyton has been a professional writer since 1999. He's been writing about the auto insurance industry for 15 years and was an in-house marketing copywriter for GEICO for a decade. Learn more about Joe at joedyton.com.

Chris Schafer
Edited byChris Schafer
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

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Updated August 25, 2024

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Homeowners insurance provides coverage for your home, its structure, and your personal belongings. If your home receives damage, someone gets injured on your property, or your house is burglarized, you can file a claim with your insurance company, which will help pay for repairs or replacements.

Unplanned home repairs can also be expensive, which makes home insurance so critical. Unfortunately, homeowners insurance rates are rising throughout the U.S. due to climate disasters and inflation, and Insurify projects a 6% increase in average homeowners insurance rates in 2024.

The good news is you have ways to lower your homeowners insurance premiums. Keep reading to learn how you can address rising homeowners insurance rates.

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Key factors influencing homeowners insurance rate increases

The price you pay for your home insurance depends on a variety of factors, including your ZIP code, the amount of coverage you need, your claims history, the size of your home, and more. Any and all of these factors could lead to your homeowners insurance rate increasing.

Here are a few more factors that could determine your homeowners insurance increase.

Natural disasters and weather events

Severe weather events, like hurricanes, floods, tornadoes, and heavy rainstorms, can damage your home significantly. Insurance companies set prices to help mitigate their risk and protect against financial losses. And as the frequency of these events has increased, rates have climbed in response.

Homes have also become more expensive to repair following a severe weather event. This means insurers are paying out more in claims.

Insurance companies are raising homeowners insurance rates to help pay for claims after the fact and in anticipation of future severe weather. Don’t be surprised if your home insurance rates increase if you live in an area with a history of heavy storms or natural disasters.

Learn More: What is Windstorm Insurance, and Who Needs It?

Learn More: What is Windstorm Insurance, and Who Needs It?

Property value and reconstruction costs

A home’s replacement cost can be quite high following a covered loss. The necessary materials, time, and labor make home reconstruction and repair costly. All these prices have climbed even more due to limited supplies and labor shortages.

If insurance companies have to pay more to repair or replace a home after a claim, they’re going to find a way to offset that higher cost. That usually involves raising home insurance premiums.

Location risks

The phrase “location, location, location” comes up often in real estate, but it also applies to homeowners insurance rates. People who live in high-risk areas usually pay more for their insurance premiums.

High-risk areas are places where the chances of floods, hurricanes, or wildfires are high. Areas with high crime rates could also be deemed high-risk. Proximity to a fire station or fire hydrant could also affect how much you pay for homeowners insurance, as being near these emergency services reduces the risk that you’ll file a costly claim.[1] [2]

Economic and market factors

Inflation is affecting home insurance rates as well. You might be surprised to see higher rates if you haven’t made changes to your property or filed a claim, but you’re paying more because inflation is driving higher costs for your insurer.

Factors within homeowners’ control that affect insurance rates

Things like the weather, inflation, and rising materials costs are raising your home insurance rates, and there’s little you can do to change these. But other factors affecting your home insurance rates are within your control.

Home improvements and additions

Changing things up in your home could affect your homeowners insurance rate. You could lower your home insurance premium if you update parts of your house that previously weren’t up to modern building standards. This could lower your premiums by making your home safer.

But not every home improvement will lower your rates, and some home improvements could cause your premiums to increase if they raise your home’s value.

Learn More: Does Homeowners Insurance Cover Home Improvements?

Learn More: Does Homeowners Insurance Cover Home Improvements?

Credit history

Most states allow your insurer to use a credit-based insurance score, based on your credit history, to help determine your home insurance premium. Your credit history isn’t the only factor home insurance companies use to determine your premium, but it can factor in. It helps insurers determine how likely you are to file a claim as well as pay your home insurance bill on time.

Your payment history, loan amounts, new credit applications, and current account balances can all lead to credit score changes, and a better credit score can lower your rates with insurers.

Insurance bundling and discounts

Insurance companies would love for you to insure all your belongings with them. That’s why many insurers reward policyholders who do so with a multi-policy discount. You could help offset any homeowners insurance rate increases by insuring your home and car with the same company. Bundling your vehicle and home with the same insurer not only saves you money, but it can also make it easier to keep track of all your policies.

Claims history

Much like with your credit history, insurers look at your past claims to help determine your homeowners insurance rates. The fewer claims you make, the better chance you have of preventing your premium from increasing. This is because insurance companies view people with fewer claims as lower-risk. And less risk means paying out fewer claims in the future.

Coverage changes

More comprehensive homeowners insurance coverage typically leads to higher premiums. You might want to increase your homeowners coverage over time, especially if you remodel your home or build an addition. The extra protection brings peace of mind but could increase your rates.

But raising your deductible — the amount you pay out of pocket for a covered claim — could lower your monthly premium because you’re taking on more of the up-front risk yourself. Just consider how expensive those repairs could be before making yourself more financially responsible for them.[3]

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How to get cheaper homeowners insurance

Here are a few ways you can reduce your heightened home insurance rates:

  • illustration card https://a.storyblok.com/f/162273/x/fa11c1fe75/comparison-website.svg

    Shop around for better rates

    Many companies offer homeowners insurance. If you’re not content with your insurer, see what other rates are available. Price-comparison platforms allow you to see multiple homeowners insurance prices in one spot.

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    Review and adjust your coverage

    Your home will hopefully increase in value as time goes on, but what’s inside might not. Check out your home insurance policy limits and take inventory of your personal belongings. As their value decreases, consider lowering your coverage on them to reduce your rates.

  • illustration card https://a.storyblok.com/f/162273/150x150/b045612c49/house-rental-96x96-orange_045-value.svg

    Reduce risk

    Insurers raise your rates to help offset the costs of claims they may have to pay out in the future. If an insurer feels you’re less of a risk, you could pay less for your homeowners policy. Reinforcing your roof, adding storm shutters, and getting rid of risky extras like a swimming pool or trampoline are all steps you could take to reduce your claims risk.[4]

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    Ask about other discounts

    Always ask your insurer what other discounts you could be eligible for. You may be able to lower your home insurance premiums by having a security system, smart locks, and smoke detectors in your home. You could also get discounts for being a military member, having a home near a fire hydrant, having a new roof, being a senior or retiree, or being claims-free for an extended period of time.

Rising home insurance rates FAQs

Homeowners insurance rates are increasing for a number of reasons. Thankfully, you have ways to minimize this upward trend. Check out this additional information about rising homeowners insurance rates.

  • Why did my homeowners insurance go up in 2024?

    Your homeowners insurance probably went up in 2024 for a number of reasons. When it comes to the insurance industry, rates increased because of higher materials costs, inflation, and more frequent and more severe weather events in recent years.

  • Is homeowners insurance going up because of inflation?

    Yes, inflation is part of the reason homeowners insurance is going up. Construction costs, materials prices, and labor costs have increased, which makes it more expensive to rebuild or repair a home. Insurers raise premiums partly to make up for those increases.

  • What factors can cause your home insurance premiums to increase?

    Some factors that cause home insurance premium increases are out of your control, such as inflation, severe weather events, and higher property values. But other factors are within your control, like your home insurance claims and credit history. Make sure you’re actively working to keep these latter metrics as positive for you as possible.

  • How do natural disasters and severe weather events affect your home insurance rates?

    If you live in a high-risk state prone to natural disasters or severe weather events, you could pay more for your homeowners insurance. This is because your home is more at risk of needing to be repaired or replaced at some point in the future. Given how expensive it can be to rebuild a home, insurers mitigate the risk by charging higher homeowners premiums in states with severe weather.

Sources

  1. Kiplinger. "Eight Reasons Why Your Home Insurance Costs Are Surging."
  2. Kin. "What impacts my home insurance premium?."
  3. AAA Living. "Do’s and Don’ts: The Factors That Affect Homeowners Insurance Premiums."
  4. Insurance Information Institute. "12 Ways to Lower Your Homeowners Insurance Costs."
Joe Dyton
Joe DytonInsurance Writer

Joe Dyton has been a professional writer since 1999. He's been writing about the auto insurance industry for 15 years and was an in-house marketing copywriter for GEICO for a decade. Learn more about Joe at joedyton.com.

Chris Schafer
Edited byChris SchaferSenior Editor
Chris Schafer
Chris SchaferSenior Editor
  • 15+ years in content creation

  • 7+ years in business and financial services content

Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.

Featured in

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