Why Did My Home Insurance Premium Go Up This Year?
Why Did My Home Insurance Premium Go Up This Year?
If you've noticed that your homeowners insurance premium has gone up, you're not alone. In fact, average home insurance rates jumped by around 15% in 2023 alone, according to data from the Federal Reserve. For many Texas homeowners, these increases have come as a surprise—especially when no claims have been made. So what's behind the rising costs?
Let's break down the main reasons your insurance premium might be climbing and what you can do about it.
1. Inflation Is Driving Up Rebuilding Costs
One of the biggest factors affecting insurance rates is inflation. As the cost of materials and labour increases, so does the cost to rebuild or repair your home. Insurance companies adjust their rates to account for this rising replacement cost, which directly impacts your premium.
Example: Lumber prices soared in recent years, pushing up the cost of repairs after storms or fires. If your coverage is based on rebuilding your home at current market prices, expect your premiums to follow suit.
2. Extreme Weather and Natural Disasters
Texas is no stranger to severe weather. Hurricanes, hailstorms, wildfires, and winter freezes all take a toll on homes and the insurance companies that protect them. When insurers experience a spike in claims due to weather events, they often increase premiums across the board to offset those losses.
Even if you personally haven't filed a claim, your area’s overall risk profile affects your rate.
3. Your Claims History
If you’ve filed a claim in the past few years, your insurer may view you as a higher risk. Even small claims can impact your premium at renewal time. Multiple claims within a short period often result in steeper increases.
4. Property Improvements or Changes
Have you added a pool, renovated your kitchen, or expanded your living space? Any upgrades that increase your home's value can also raise your premium. That’s because you’ll likely need more coverage to fully protect the enhanced property.
5. Changes in Your Insurance Score
Many insurers use a credit-based insurance score to determine premiums. If your credit score or financial situation has changed, it could lead to an adjustment in your rate. Insurers consider these scores a reflection of risk.
6. Insurance Company Rate Adjustments
Sometimes, rate hikes are part of a company-wide strategy due to broader economic trends, increasing reinsurance costs, or state-level regulation changes. These shifts can affect all policyholders, regardless of individual behaviour.
What You Can Do to Manage Rising Premiums
Shop Around: Compare quotes from multiple insurers to ensure you're getting the best rate.
Increase Your Deductible: A higher deductible can lower your premium—just make sure it's still affordable.
Bundle Your Policies: Combining home and auto insurance with the same company can offer significant discounts.
Ask About Discounts: Security systems, smoke detectors, and good payment history might earn you a lower rate.
Review Your Coverage: Make sure you're not overinsured or paying for coverage you don't need.
Home insurance premiums are rising across the board, and it’s often out of your control. But by understanding the factors behind the increases and taking proactive steps, you can make sure your policy still fits your needs and your budget.
Need help reviewing your current coverage or looking for better rates? Get a quote now and speak to a local expert who understands what Texas homeowners need.
