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KEY TAKEAWAYS
- Insurers are increasing premium prices as climate change and tariffs increase the number and costs of home repairs.
- Homeowners can shop around to ensure they get the best deal, check for discounts from their insurer, or raise their deductible for a lower premium.
- Prospective homebuyers can consider moving to other states with lower insurance costs. Different aspects of a house, like its age and whether it has a pool, can also increase premiums.
An increasing number of homeowners have seen their insurance premiums rise over the past few years.
Almost half of American homeowners saw their insurance premiums increase in the past year. That is the highest rate of increases in insurance costs in more than a decade, according to J.D. Power. In a recent survey from Realtor.com, three-fourths of homeowners said they believe their insurance will eventually become unaffordable.
“[Premiums are increasing by] hundreds, if not thousands of dollars, depending on the value of your home and where you live,” said Craig Martin, executive director of global insurance intelligence at J.D. Power. “Home ownership becomes a challenge, and the general financial wellness and financial capabilities of the consumer are really impacted.”
Martin said many insurers have increased premiums for their customers so they can afford to cover increasingly expensive home repairs. Weather-related damages to homes are becoming more expensive, as climate change has made natural disasters more intense and common. Additionally, the inflation of home materials and labor due to the COVID-19 pandemic and tariffs has made building and repairing homes more costly.
How Homeowners Can Reduce Their Insurance Bill
Before renewing their insurance, homeowners should review how much their premiums have increased and shop around to find the best deal, Martin said.
“Things are changing too fast, so make sure that you are well educated,” Martin said. “Taking a little time to make sure you understand what’s going on [with your policy] is really a great best practice to be financially healthy.”
Some companies also offer deals if you bundle your home and auto insurance. Home improvements like disaster weatherproofing, replacing an old roof, or renovating to include smart home technology with a burglar alarm or one that can detect flooding in the home can also discount your insurance bill.
“A lot of people don’t realize they need to call us if they finish their renovation,” said Carina Hatfield, an insurance agent from Pennsylvania. “They replaced [their roof], but they missed out on saving a couple of hundred dollars because they didn’t tell us right away.”
If a homeowner cannot afford the cost of their premium, they can also consider increasing their insurance deductible, Hatfield said. If something were to happen, this would make the homeowner more responsible for paying for damages, but it would lower their premium.
What Potential Homebuyers Need To Know
Many prospective homebuyers are finding it hard to enter the housing market due to rising insurance prices; 65% told Realtor.com they were stressed about getting and maintaining their insurance. One-third said they have been forced to change where they are looking for a home because of high insurance premiums.
Homeowners in areas more susceptible to severe weather events, such as Florida, Texas, and Louisiana, have seen their insurance premiums increase faster than in most other states. There can be substantial differences in insurance costs and coverage available in different states, Martin said, but homeowners should also consider any financial or lifestyle trade-offs before moving.
“Be informed, because while you may think certain areas of the country are safe, there are a lot of changing weather patterns,” Martin said. “We’ve seen areas that you may not think of as higher risk, but have started to have more weather disasters.”
Potential homebuyers should also consider things like the age of the home and when the roof was last replaced. Other factors, like having a pool or trampoline, can also increase the coverage you need and the cost of their insurance.
“A newer construction [is] likely to have used all the latest building requirements and codes, and that becomes a factor,” Martin said. “You might love that old home, but it may be a higher risk, and actually end up being more costly to insure, even though it seems like a good deal on the front end.”
