Why are Insurance Rates Going Up?
Adverse weather, higher repair costs, and greater liability risks are behind the increase in homeowner’s insurance rates.
Insurance prices have risen dramatically in recent years, particularly regarding homeowners’ policies. If you suffer sticker shock while shopping for coverage or paying your latest bill, you are likely wondering what is driving the increase. Hartman Insurance Agency, Inc. explains why homeowner’s insurance policy rates keep going up.
Reasons Behind the Rising Cost of Home Insurance
The price of everything, including homes, cars, and medical care, has risen dramatically in recent years. Not only are you paying more for most items, but you are also paying more for insurance coverage.
Insurance protects you against unexpected events and prevents having to pay out of pocket. While coverage costs have increased across the board, homeowners insurance rates, in particular, have spiked in recent years. According to a November 2023 Policy Genius report, the average amount of premiums jumped by more than 20% since 2022. Reasons behind rising costs include:
- Environmental factors: The State of Michigan warns that due to climate change, residents can expect more heavy rains and extreme heat. Other states also deal with increased hurricanes, tornadoes, wildfires, and other calamities. These can all cause major damage to homes, resulting in an increase in claims.
- Changes in risk categories: As adverse weather events increase and impact new and broader areas, this is causing insurers to reassess risk categories. If your area was previously changed from low to medium or high risk, expect an increase in premiums.
- High labor and construction costs: The price of materials, transportation, and labor rates have all jumped alongside other expenses in recent years. As a result, the overall amount needed to repair or rebuild a damaged home is more. This price increase is directly reflected in your insurance bill.
- Greater liability risks: As people spend more time at home and host gatherings with friends, premises liability claims have increased. These are typically covered under homeowners insurance. Pools, trampolines, fire pits, and even pets all increase accident risks, resulting in higher premiums.
How to Reduce the Amount You Pay for Homeowners Insurance
Reducing your coverage may seem like the best way to reduce homeowner’s insurance costs, but it could cost you significantly more in the long run. Considering the overall increase in risk, it is important to have the appropriate amount of coverage in place. The Insurance Information Institute (III) offers tips on how you can save money while still protecting yourself and your property:
- Shop around in selecting a policy;
- Purchase home and auto policies through the same insurer;
- Make your home more secure and damage-resistant;
- Maintain a good credit score, which directly affects your rates.
Discuss Your Options With Our Michigan Home Insurance Agents
Since 1946, Hartman Insurance has been helping to protect homeowners in the Saline and Ann Arbor area. To discuss options that can help lower your premium rates, give us a call or contact our Michigan home insurance agents online today.