Homeowners insurance rates have jumped up to 50% last year, and California and Florida, two states more prone to natural disasters such as wildfires and storms, were hit the hardest.
According to HUB Private Client, specializing in high-end homeowners insurance, one luxury home in South Florida even saw a 600% increase in premiums, from $12,000 to $72,000.
To save even a little money on these skyrocketing homeowners’ insurance premiums, here’s what you can do.
Why are premiums becoming more expensive?
The main contributor to rising homeowners insurance premiums is inflation. According to Chubb Market Trends 2023, the prices of high-end appliances increased by 5 to 16 percent between 2021 and 2022. Construction costs have also risen significantly, with plumbing materials increasing by up to 35%, not to mention labor costs rising.
Adding to that, the fact that natural disasters are becoming more frequent, the premium cost increase is inevitable. However, it’s not just California and Florida. Last year’s winter storms that hit the Great Lakes region cost insurers more than $6 billion, according to a HUB report. National insurers also lost $17 billion and $11 billion each from tornadoes and hailstorms.
How are premium rates determined?
The age of your home has the biggest impact on your homeowners’ insurance premiums. Older homes are more susceptible to fire and natural disasters, which is more likely to drive up premiums, as well as newer homes with expensive, state-of-the-art technological systems.
Also, the higher the amount of coverage means more expensive premium, and the higher the deductible, the lower its premium get. If you’ve made a claim in the past, insurers may assume that you’re more likely to make a claim in the future based on the history, which can also increase the rate.
There are dozens of other factors that insurers use to calculate your premium, including marital status, pets, and distance to a fire station. In many states insurers base their rates on your credit history as well, so if you have a bad credit history, your premiums could be higher than others.
To lower your rates
The first step to saving money on your insurance is to get quotes from at least two or three different insurers, both when you first sign up and when you renew your policy. It’s important to shop around as the same coverage can be priced differently. Additionally, if you have different car and home insurance companies, it’s worth considering bundling them together. Many insurers offer “bundle discounts” for buying multiple policies.
Don’t forget to ask about insurer discounts. Some of the most common are discounts for home management, such as smart smoke detectors and security systems. There are also loyalty discounts, which means that if you’ve had the same policy for a long time and haven’t received any discounts in the past, you can contact your insurer to see if you can get a discount. You can also get a discount for choosing your insurer’s preferred payment option. You might get a discount for choosing certain payment options, such as automatic payments or paying the full premium upfront. There are also discounts for first-time homebuyers, and military discounts, so contact your insurer to see if they have options that work for you.
You can also consider raising your deductible to save money on your premiums. A higher deductible means higher out-of-pocket expenses but lower premiums. However, you should carefully consider whether you can afford the increased deductible in the event of a catastrophic event to avoid potential headaches.
Avoiding to make minor claims too frequently is another tip, as even small claims can increase your premiums.
Home maintenance
To reduce your home insurance premiums, you need to prove to your insurer that your home is safe from hazards and disasters. Wildfires and other natural disasters have caused many insurers to refuse to renew homeowners’ insurance policies, especially in California. Experts say that it is important that you prove your home is well-maintained to renew your policy and save money on premiums.”
One of the easiest things homeowners can do is to take care of their landscaping. Remove large trees that have a high risk of falling during heavy rains and storms, and if you’re in a wildfire-risk area, consider clearing brush around your home and replacing combustible materials such as wood decking in your yard with fire-resistant materials. Upgrading your roof can also help prevent heavy rain damage, which could lower your insurance premiums.
BY JOOHYUN LEE
