Opening your homeowners insurance renewal and seeing that your premium has increased can be frustrating, especially if you haven’t filed a claim, made changes to your home, or had any problems with your policy.
One of the most common questions we hear from homeowners is: Why did my homeowners insurance go up when nothing has changed?
The answer is that homeowners insurance premiums are based on more than just your individual home or claims history. Insurance companies consider many different factors when determining rates, including the cost to repair and rebuild homes, recent claims trends, severe weather, the characteristics of your property, and the amount of coverage provided by your policy.
There isn’t one explanation that applies to every homeowner or every insurance company. If you receive your renewal and notice a significant increase, give us a call. We can review your policy, help explain what may have changed, and determine whether there are other options worth considering.
Why Can My Insurance Increase If I Haven’t Filed a Claim?
It’s easy to assume that your insurance premium should stay the same as long as you haven’t filed a claim. Unfortunately, insurance doesn’t always work that way.
Your individual claims history is only one of many factors that may affect your premium.
Insurance companies also look at the amount they are paying for claims overall and what it currently costs to repair or replace damaged homes. Even if you personally haven’t experienced a loss, increasing costs and losses throughout your area or the insurance market can contribute to changing rates.
This is one reason you may see your homeowners insurance increase even though nothing about your home appears to have changed.
Rising Repair and Rebuilding Costs
The cost of repairing or rebuilding a home can change significantly over time.
Building materials, labor, transportation, and other construction expenses all contribute to how much it would cost to repair your home after a covered loss.
Your homeowners insurance is designed to provide coverage based on the terms and limits of your policy if your home is damaged by a covered event. As rebuilding costs increase, the amount of insurance needed to properly protect a home may also increase.
You may notice that your dwelling coverage, often shown as Coverage A on your policy, changes at renewal. Many insurance policies include provisions that adjust coverage amounts over time to account for changes in construction costs.
An increase in your coverage amount can also contribute to an increase in your premium.
If you notice that your Coverage A amount has changed and you aren’t sure why, reach out to us. We can review your policy with you and explain what has changed from your previous term.
Severe Weather Can Affect Insurance Rates
Here in Tennessee, severe weather is something homeowners are familiar with.
Tornadoes, strong winds, hail, thunderstorms, and other weather events can result in significant property damage. When insurance companies experience a large number of claims or an increase in the cost of claims, those trends can affect insurance pricing.
This doesn’t necessarily mean that one storm in your area caused your individual premium to increase. Insurance companies use their own rating methods and consider many different factors when determining premiums.
However, the overall cost and frequency of property losses can play a role in insurance rates, even for homeowners who have never personally filed a claim.
Can My Roof Affect My Homeowners Insurance?
Your roof can be an important factor when it comes to homeowners insurance.
Insurance companies may consider the age, condition, material, and other characteristics of a roof when determining eligibility, coverage, or pricing. Guidelines vary between insurance companies, so there isn’t one specific roof age that applies to every policy.
As your roof gets older, your insurance options or the type of coverage available for the roof may also change depending on the carrier.
If you have recently replaced your roof, let your insurance agent know. Keeping information about your home up to date can help make sure your policy accurately reflects your property.
If you’re unsure how your roof is currently covered, we can also review that with you.
Can Filing a Claim Increase My Premium?
Claims history can be one factor insurance companies consider when determining premiums, but the effect of a claim varies depending on the circumstances and the insurance company.
The type of claim, amount paid, number of previous claims, and other underwriting factors may all be considered.
However, having a claim does not automatically mean your premium will increase by a certain amount, and avoiding a legitimate claim solely because you are worried about your future premium may not always make sense.
We covered this topic more thoroughly in our blog, “When Should I File an Insurance Claim?”
If you experience a loss and aren’t sure whether you should file a claim, contact us. We can help you understand your deductible and coverage and talk through your options before you make a decision.
Did Something Change on My Policy?
Sometimes an increase may be related to a change on your individual policy.
Your coverage amounts may have changed, a discount may no longer apply, or other policy information may have been updated at renewal.
For example, changes involving your deductible, dwelling coverage, endorsements, discounts, or other coverage options can affect the total premium.
This is why we recommend reviewing your renewal rather than only looking at the final price.
If something looks different and you don’t understand why, ask us. Part of our job as your insurance agent is helping you understand what you’re paying for and what coverage you have.
What Can I Do If My Homeowners Insurance Increased?
If your homeowners insurance premium increased, you have options.
The first step is to contact your insurance agent and review the policy. There may be a clear explanation for the increase, or there may be opportunities to adjust your policy depending on your needs.
We can help:
- Review your current coverage and renewal premium
- Check that the information about your home is accurate
- Review available discounts
- Discuss your deductible and coverage options
- Look for potential savings from bundling home and auto insurance
- Compare options with other insurance companies when appropriate
The goal shouldn’t necessarily be to find the cheapest policy available. You want to make sure you are comparing similar coverage and that you understand what you may be giving up if you reduce coverage to lower your premium.
A lower price isn’t always a better policy.
Should I Shop My Homeowners Insurance Every Year?
You don’t necessarily need to switch insurance companies every time your premium increases.
Sometimes staying with your current carrier may still be the best option based on your coverage, discounts, claims history, and available rates. Other times, it may make sense to compare your current policy with other options.
One advantage of working with an independent insurance agency is that we can work with multiple insurance companies rather than only one carrier.
If your premium changes significantly, we can review your current policy and determine whether it makes sense to look at other options. If your current policy is still the best fit, we’ll let you know that too.
The Bottom Line: Why Did My Homeowners Insurance Increase?
There usually isn’t one single reason homeowners insurance premiums increase.
Higher rebuilding costs, severe weather and claims trends, changes in coverage, characteristics of your home, claims history, and insurance company rate changes can all potentially affect what you pay.
Most importantly, an increase doesn’t necessarily mean you did anything wrong.
If your homeowners insurance premium increased and you’re wondering why, you don’t have to try to figure it out on your own.
At Davis Insurance Agency, Inc., we believe you should understand your insurance and what you’re paying for. We can review your renewal, explain your coverage, look for potential savings, and compare other options when it makes sense.
We proudly serve homeowners throughout Spring Hill and Middle Tennessee and are always happy to answer questions about your insurance.
Did your homeowners insurance premium increase at renewal? Give Davis Insurance Agency, Inc. a call. We’ll review your policy with you, help you understand what may have changed, and determine whether there are other options available.