The Shocking Truth About Your Increasing Home Insurance Bill

If you are a homeowner, you might have realized that your insurance bill has continued to increase over the past couple of years. Of course, each homeowner’s insurance is different, and some might have been affected more or less than others, but chances are your insurance has increased. Why could this be?

1.     Increasing Labor and Supply Costs: This is probably the main reason for most homeowners' increase in policy costs. Your rates are primarily calculated based on your dwelling coverage, which is how much the insurance company would have to pay to repair damages or even replace your home. These costs have risen even more significantly since you purchased your house over the past couple of years. This was seen especially during COVID-19 when there were significant supply constraints on most hardware, especially building materials. In addition, costs have soared due to the recent rapid rise in inflation.

2.     Property Changes: When you make add-ons or renovations to your home, most of the time, it will increase the value of the home, and with increased value comes increased repair costs and, finally, a higher insurance bill. Another change to your property could be the addition of “attractive nuisances.” Insurance companies will often increase the cost of your policy when attractive nuisances are introduced to your property. These include items like play sets, trampolines, swimming pools, and even pets.

3.     Increased Natural Disasters: Over the past couple of years, there have been some severe natural disasters that resulted in very large payouts by insurance companies. According to Policy Genius, “Just in 2022, the National Oceanic and Atmospheric Administration reports 18 costly natural disasters resulted in over $165 billion in losses — up 6% compared to 2021. Florida alone accounted for $116.7 billion of those losses due to Hurricane Ian that pummeled the state in September 2022.” This has increased the fear of losing money so to better prepare for continued natural disasters, they have increased their rates for the policies.

4.     Credit Score and Insurance Score: This factor is more on an individual basis than a more general factor but still plays a significant role in your insurance premium. Your insurance score is calculated by measuring your likelihood of filing for a claim over the coverage period. The way they measure this is by seeing if you have had many claims recently, as well as looking at your credit score. If you are tight on funds, high on debt, and have recently filed claims, then you will likely file another one during the coverage period.

For more questions regarding home insurance, do not hesitate to reach out. At Taiter Realty, we strive to provide our clients with the best services and the most information needed to make comfortable, educated decisions.