Understanding the Rise in Home Insurance Rates and How to Lower Them

If you’ve noticed your home insurance rate ticking upward, you aren’t alone. Some major insurers boosted their rates by double digits in 2023. There are several different factors at play, but it may be possible to reduce your premiums and keep more money in your pocket. Here are some reasons why your homeowners insurance may have gone up—and what you can do about it.

Why Did My Home Insurance Go Up?

All kinds of things can affect the cost of homeowners insurance. Below are some of the more common reasons why you might experience a rate hike.

Weather Events

Your premiums might increase if you live in an area that’s prone to hurricanes, wildfires, or other major weather events. Thanks to increased windstorm risk, for example, some Louisiana homeowners have seen their rates go up by 63%, according to a 2023 report from the First Street Foundation.

History of Filing Claims

Filing an insurance claim may be necessary if you experience a covered event. Otherwise, you could be up against significant out-of-pocket costs. But a new claim might also affect your premiums. When determining your rate, your insurer will consider losses associated with your home over the past five years. Multiple claims could suggest that you’re a high-risk policyholder.

Inflation

As prices increase, it’ll likely cost more to make home repairs or replace items that are damaged or destroyed by covered events. The expected cost of rebuilding your home might also be higher now than it was in the past. Your insurer may respond by bumping up your rate.

Risky Additions to Your Home

Adding “attractive nuisances” like a pool, trampoline, or treehouse may pose a safety risk—which could lead to higher insurance premiums.

How to Lower Your Homeowners Insurance Rates

While weather events and inflation are out of your control, there are still ways to save on homeowners insurance. Consider the following tips:

Bump Up Your Deductible

This will likely reduce your premium. Just keep in mind that if you file a claim that gets approved, you’ll have to meet your deductible before your insurance kicks in.

Adjust Your Coverage

Home insurance is designed to protect your home’s structure and your personal belongings. Most policies also include liability insurance and will cover some additional living expenses if your home becomes uninhabitable. Modifying your coverage levels could reduce your premium.

Only File a Claim When You Need To

If you encounter a home repair that will cost less than your deductible, you might be better off handling it yourself.

Make Your Home Safer

Installing an alarm system or storm windows could reduce your risk—and your premium. Contact your insurer to see which safety modifications might make sense.

Bundle Your Policies

Consider bringing your home and auto coverage under the same insurer. Bundling your policies might lead to significant savings.

Ask for Discounts

Seniors, veterans, and other policyholders could qualify for lower rates. Your insurer might also offer a loyalty discount if you’ve been with them a while.

Shop Around

Other insurance companies might offer better rates. It may be a good idea to gather quotes and compare premiums and coverage.

Improve Your Credit

Depending on where you live, your credit-based insurance score could affect your home insurance rate. Some insurers use it to predict how likely you are to file a future claim.

Frequently Asked Questions

Does Homeowners Insurance Increase After a Claim?

Yes, filing a claim can lead to an increase in your homeowners insurance premium. Insurers consider your claim history when determining your rate, and multiple claims can suggest that you’re a high-risk policyholder.

Should You Shop Around for Homeowners Insurance?

Absolutely. Shopping around and comparing quotes from different insurers can help you find better rates and coverage options that suit your needs.

Does Credit Affect Homeowners Insurance?

In many states, your credit-based insurance score can impact your homeowners insurance rate. Insurers use this score to predict the likelihood of you filing a future claim.

The Bottom Line

There are many reasons why your homeowners insurance rate could go up. You may get hit with an increase if you live somewhere that’s prone to adverse weather. Inflation and your claim history could also play a role. Fortunately, there may be steps you can take to save money on your insurance costs.

Improving your credit could be one way to secure a better rate—it’s also good for your overall financial health. Experian makes it easy to check your free credit report and credit score at any time.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team is ready to assist you with the best mortgage solutions tailored to your needs.