Most people can expect their homeowners insurance rates to go up this year — along with the cost of materials and supplies — in this economy. Several factors are behind the rising rates. Severe weather events continue to cause serious damage and costly insurance claims. The rising cost of building materials, supply chain issues and unfilled jobs are driving up the costs of home repairs.
What Are Some Key Factors Driving Up Home Insurance Rates?
Extreme Weather Events and Catastrophes
Hurricanes, floods, droughts, wildfires and other severe weather events have become frequent, destructive and costly. In 2022, the United States sustained 15 weather events with losses exceeding $1 billion each. As weather-related damages go up, so does the cost of insurance overall. Insurers typically adjust rates on a state-by-state basis based on actual and anticipated weather-related losses.
Rising Materials Costs
Another key consideration when pricing homeowners coverage is the cost to repair or rebuild a home in the event of a loss. Limited supplies and inflated prices for most building materials continue. Consider this sampling of price increases between October 2021 – October 2022:
Material goods for new residential construction rose 14.3%.
Lumber and wood products went up 6.2%.
Asphalt roofing materials grew 14.5%.
As building costs go up, so does the cost to repair or replace homes damaged by covered losses.
Skilled Labor Shortage
The construction industry is facing a skilled labor challenge, which has resulted in added expenses related to wages, supply chain problems and other construction issues. This sector had 423,000 job openings as of September 2022, more than twice the projected number of annual openings.
Factors Impacting Your Homeowners Rate You May Be Able to Control
Current market conditions that affect your insurance premiums may be out of your control, but there are steps you can take to help keep the cost of your homeowners coverage in check:
Review your insurance. Ask The Jemez Agency to review your current coverage to ensure you’re getting the customized protection you need.
Install protective devices. To help avoid losses and save money, consider installing fire alarms, water sensors, interior sprinkler systems and smart home protection devices.
Cancel or reduce coverage you no longer need.
Increase your deductible. A higher deductible will likely reduce your premium. Just remember to have enough savings to cover your deductible should you experience a loss.
Bundle your policies. Most insurance companies offers discounts when you purchase more than one policy with them. Home and auto are commonly bundled for a discount, but discounts may also apply to boat, valuables, personal umbrella protection and other specialty coverages.
