Why Did My Home Insurance Premium Increase?
Did you open your home insurance bill last year and about have a heart attack from the shock of the sky high premium? If so, you are not alone.
Premiums rose dramatically last year in Michigan due to the high cost of building materials and labor plus the increased frequency and severity of weather losses over the past few years.
In February 2024, homeowners were paying $141 a month on average for $250,000 worth of dwelling insurance. That’s a 23% increase from the previous year.
Even if you have never filed a claim on your home and have always kept your property in good shape, you may have seen your home insurance premium jump by 20% or more. But why? Unfortunately, there are many factors beyond your control that can cause your premiums to go up. Here are some common reasons for the price increases.
Rising Rebuilding Costs
Insurance covers the cost to rebuild your home if it’s damaged, not just its market value. Due to inflation, materials like lumber, drywall, and roofing supplies have become more expensive. Labor shortages in the construction industry have also driven up wages. These factors mean insurers must account for significantly higher costs to repair or rebuild homes, leading to higher premiums.
Increased Natural Disasters
Insurance companies constantly evaluate risk on a regional level. Many people moved during the pandemic, and this has caused their risk to increase, resulting in premium increases. If your area has experienced more wildfires, hurricanes, floods, or even severe storms, your home may now be considered at higher risk, whether or not you personally have suffered any damage to your home. To cover potential future claims, insurers raise rates across the board in high-risk areas, meaning you could pay more even if you’ve never filed a claim.
Insurance Company Losses
Insurance is a pooled risk system, which means insurers need to collect enough in premiums to cover all claims paid out. In recent years, insurers have seen rising claims from weather events, lawsuits, and even theft and vandalism. If your insurer experiences higher-than-expected losses, they may increase premiums across all customers to recoup those losses and stay financially stable.
Policy Changes or Adjustments
Sometimes, your insurer may change the terms of your policy, and this can lead to increased coverage limits, adjusted deductibles, or new coverage options like extended replacement cost. Even minor changes to your home (like installing a pool or renovating your kitchen) can increase the value that needs coverage, and this increases your premium.
Inflation
Changes to economic conditions affect everything. General inflation means higher administrative costs and claim processing. Insurers pass these higher operating expenses onto customers through higher premiums.
Contact Our Michigan Home Insurance Agency Today
Home insurance can increase for various reasons. Even if you have never filed a claim, you could be subject to skyrocketing premiums.
Looking for the best homeowners rates around? Contact Hartman Insurance Agency, Inc. in Saline, Michigan. No matter what type of insurance you desire, we’d love to help you get what you need. Call (734) 999-4190 or fill out the online form to schedule a consultation.