It’s no surprise that the damage recently done in the U.S. by wildfires, floods and hurricanes has caused homeowners’ insurance rates to increase. And this is nothing new. It’s estimated that home insurance rates have risen by about 4% during 2021. A January 2021 National Association of Insurance Commissioners study showed a 3.1% increase in insurance premium costs nationwide in 2018.

A Tough Decade for Natural Disasters

This past decade has been tough on insurance companies because of the number of natural disasters requiring large claims payoffs for damage done. Wildfires have burned many houses to the ground, hurricanes have wreaked havoc in many coastal areas, floods have put many homes under water and tornadoes have destroyed innumerable homes.

When insurance carriers suffer high rates of losses in any given year, it’s not unusual when your particular policy comes up for renewal it will include increased costs. Even if your particular home wasn’t affected and you submitted no claims, insurance companies will typically raise everybody’s premium rates to cover company-wide losses. If you submitted one or more recent claims, look for your premium rates to increase even more than average.

Other Reasons for Policy Premium Increases

In addition to your insurance company’s reaction to higher than expected claims payouts due to natural disasters, there are other reasons that you may be witnessing your homeowners insurance premiums rising. These may include:

  • Your credit score has gone down. Many insurers use credit scores in underwriting policies, with lower scores leading to higher premiums.
  • The rebuild cost of your home may have gone up due to a rise in local construction materials and construction labor costs. Spikes in constructions costs may be related to increased demand, shrinking supply or added tariff costs. When construction costs increase, your dwelling coverage limit may also need to be increased, causing a hike in premium cost.
  • Your insurer conducts an inspection on your home and determines that certain upgrades are necessary. They may notify you of upgrades needed and a certain time frame to have these completed. Failure to comply may cause a premium cost increase.
  • Your insurance score has gone down. Your insurance score will have been rated when your policy was first issued but may be rerated at renewal time. A lower score may mean a rise in premium cost.
  • You added a hazard such as a swimming pool, treehouse or trampoline to your property.