Home Insurance Is Pricier Than Ever. Here’s Why You Should Shop Around

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

Homeowners insurance premiums rose by double-digit percentages in 31 states. Find out how shopping around could help you lower your costs. 

I live in the South, and about 10 years ago, a summer storm swept in and dropped buckets of hail on our community. Thankfully, nothing was damaged beyond repair, but our insurance company came out, performed an assessment, and wrote us a check worth thousands of dollars for the damage it found to our roof and cars.

But increasingly, those insurance checks may be getting smaller for homeowners.

Insurance companies are simultaneously increasing premiums and reducing coverage as the insured damage from severe storms, wildfires, floods, and other natural disasters has exceeded $90 billion each year for the past three years, according to Wall Street Journal (WSJ) reporting.

Here’s why insurance prices are skyrocketing and why shopping for a different policy could save you money.

Why homeowners insurance prices are rising

When weather events do lots of property damage, it can cost insurance companies tons of money to make payouts to customers. To compensate for those losses, they often raise the price of homeowners insurance premiums and even cut back on coverage to remain profitable.

And since the past three years have been extra expensive for insurance companies, they’ve passed those costs on to customers. That’s making it difficult for people to find cheap home insurance. Here’s why home insurance is so expensive right now, according to the WSJ:

Insurance companies are losing money: Home insurance companies have lost money in five out of the past six years and are expected to have an underwriting loss through 2025.Companies are raising premiums to recoup costs: There have been double-digit rate increases across 31 states since 2022.Insurance deductibles are on the rise: To offset coverage of wind and hail damage, insurers have increased deductibles for these types of damages by 1% to 2%.Reinsurance premiums are climbing: Insurance companies buy insurance too, so they can protect themselves from risk. This is called reinsurance, and these premiums are up 33% on average. The steep rise in costs is sometimes passed onto home insurance customers.

Additionally, some insurance companies have pulled out of areas of the country — or reduced coverage — that are most at risk for severe weather, including California, Florida, and Louisiana. This can make homeowners insurance difficult to get and expensive to keep in some states.

Shopping around is the best way to reduce home insurance costs

With insurance costs on the rise and no indication they’ll come down, it’s more important than ever for homeowners to shop around to find the best homeowners insurance company. Here’s why:

Switching insurers could lower your costs: A recent Consumer Reports survey showed that only 13% of respondents regularly shopped around for new coverage. But when homeowners did switch insurers, 39% did so because they got a better price.Insurers evaluate homes differently: While all insurance companies factor in risk, they don’t assess property in the same way. You could get similar coverage from a different insurer but pay less for your premium and deductibles.Assess your current coverage: One way to lower your premiums is to assess your current coverage and compare it to what other home insurance companies offer. You don’t know if you’re getting a good deal if you don’t know what your current coverage is and how it compares to competitors.Your circumstances may have changed: When you first signed up for your home insurance policy, your insurance company factored in a lot of personal information, including your marital status, credit score, credit history, etc., in addition to the features of your home. If any of this has changed since your policy began, shopping around could help you find the right coverage for your current situation.

With the recent increases in severe weather damage, it’s a smart idea to take a close look at what your policy covers. Spending some time comparing different home insurance policies could help you get the right coverage at a more affordable price.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More