Why Are Home Insurance Rates Increasing?

Your home insurance rates may be changing soon. Homeowners across the country are experiencing rate increases due to several factors beyond their control. 


Contact Svendsen Insurance Agency in Woodbridge, Connecticut, to get help shopping around for more affordable home insurance without sacrificing coverage. 


Rising Number of Claims Drives Up Home Insurance Rates 


One major factor driving up home insurance rates is the sharp increase in claims. 


Changing weather patterns are causing an increase in the number and severity of major storms and weather patterns, including tornadoes and hurricanes. Widespread damage due to fires, storm damage and flooding can devastate an entire community, triggering many homeowners insurance claims as people attempt to rebuild. 


According to the Insurance Information Institute (III), there were 90 catastrophes, and the insurance industry paid $25 billion to policyholders to cover losses in 2019. In 2020, there were 94 catastrophes resulting in $74 billion in insured losses. In 2021, there were 97 events classified as catastrophic losses, and insurance companies paid $92 billion in claims. 


One way insurance companies can recoup some of their losses is to raise premiums. Home insurance companies must request to increase home insurance rates or change underwriting guidelines with the Department of Insurance. Between January and May 2022, home insurance companies were approved for rate increases in nearly every state, with an average increase of 4.48%. 


Rising Costs Cause Home Insurance Rate Increases 


As labor and materials costs rise, the price of rebuilding a damaged home also increases. Insurance companies offset these increased costs in part by raising rates. 


According to The National Association of Homebuilders (NAHB), the cost of raw materials rose 19.2% between 2021 and 2022. Raw materials now cost 35.6% more than they did before the start of the pandemic in Spring 2020. 


How to Combat Rising Home Insurance Rates 


Your agent can help you evaluate your current coverage to help you figure out whether making changes to your policy may help you lower your home insurance rates. For example, raising your insurance policy’s deductible could help decrease your premiums. 


You may also get a discount across all of your property policies if you bundle your home and auto policies with a single insurer. 


Contact Us 


Even if you don’t experience a noticeable home insurance rate increase, it’s wise to shop around for home insurance every three to five years. Contact the home insurance experts at Svendsen Insurance Agency today to get multiple home insurance quotes from top insurance companies. 


This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.