Many factors impact why home insurance rates may rise at the end of a policy term—from the age and location of the home to personal factors such as fluctuations in credit scores. Additional influences beyond our control such as weather and climate events, material costs, and labor shortages also play a key role in the rise of rates.
Recent trends are impacting how much protection you’ll need and the price you’ll pay for it. Here are a few of the factors that are influencing higher rates:
More Severe Weather
There have been 18 weather/climate disaster events in the U.S. in 2021 with losses exceeding $1 billion in damage. The increase in severe weather caused 39 percent of all U.S. home insurance claims.
More Fire Damage
Newer homes burn more nearly six times faster than older ones due to the use of synthetic materials and open-floor plans, resulting in more total losses from fire and higher rebuild costs.
Increase in Water Damage
Water damage and freezing losses have increased by more than 10 percent from 2017 to 2019.
Bigger, Upscale Homes
Home interiors have become more upscale with custom cabinetry, hardwood floors, finished basements, and more, leading to higher replacement costs when damages arise.
Higher Material and Labor Costs
With the cost of building materials up an average of 26 percent, homes have become more expensive to fix and replace. In addition, nearly 90 percent of contractors are having a hard time finding craft workers, and 88 percent of firms are experiencing project delays. Higher labor costs drive up the price of materials leading to a rise in home insurance.
Increased Shipping Costs and Delays
The pandemic has impacted almost every part of the global supply chain causing shipping delays and higher prices. Ninety-five percent of Fortune 1000 companies have reported supply chain disruptions from COVID-19.
We can help you avoid your home being underinsured. Contact a Healy Insurance advisor today to review your coverage and make sure you have enough!
About the Authors
Connie Greenwood has over 35 years of experience as an Insurance Advisor. She enjoys helping her clients and prospects understand their insurance options, and crafting insurance solutions tailored to their unique needs. Connie finds great joy in being a trusted advisor for her clients. She loves helping protect their financial welfare against unforeseen accidents and circumstances and bringing them peace of mind.
Tim Pingel has over 20 years of experience as a personal insurance adviser. He provides individuals, couples, and families with home, auto, and umbrella insurance. His ultimate goal is to be his clients’ trusted adviser and expert, so they have the peace of mind and protection they deserve.