Home insurance premiums soar 55% – here's how you can mitigate rising costs

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Homeowner insurance premiums have increased by 55% in the last four years as losses build and insurers struggle to recoup costs, according to a recent report.

In 2023 alone, insurance rates jumped 19%, the Guaranteed Rate Insurance report said. Prices are forecasted to keep rising as the increased frequency of natural disasters builds and inflation impacts home replacement costs. Those living in Florida, Texas and California have been hardest hit by the increased costs and nonrenewals as some carriers pulled out of those markets.  

“One of the most evident market trends in 2023, which will continue into 2024, is continued volatility, particularly as it relates to the presence of top in-state carriers and the availability of insurance,” the Guaranteed Rate report said. “In some areas, top carriers are no longer offering new policies. These exits, however, have not caused ‘vacuums’ as there is evidence of new carriers, especially surplus lines, in select states entering the market due to the ability to offer policies at higher premiums.”

Whether your concern is hurricane damage, tornado damage, wind damage or flood damage, it’s best to obtain multiple quotes from several insurance companies to compare prices and what is and isn’t covered. To help you find the best insurance rate for your situation, visit Credible to compare multiple providers and choose the right option.

BUY A HOME IN THESE STATES TO GET STUDENT LOAN DEBT RELIEF

Home insurance adds to affordability challenge

Rising insurance costs add to the affordability challenges of homeownership. Consumers also face high mortgage rates and home prices. The average 30-year fixed-rate mortgage has held steady above the 7% range for the past two weeks, according to Freddie Mac.

Meanwhile, home prices continue to increase and are now 6.4% above their level last year, up from the 6% increase registered in January, according to the latest S&P CoreLogic Case-Shiller national home price index report.

Much like insurance rates, mortgage rates are forecasted to remain high as the Federal Reserve stalls on dialing back interest rates. Fed officials have said in past meetings that they anticipated rate cuts for 2024, but need more confidence that inflation is heading toward the 2% target rate. Mortgage rates are closely tied to interest rate movements. 

Home prices are likely to keep gaining, too. Fannie Mae adjusted its home price projection and forecasts upward, forecasting prices to increase 4.8% annually in 2024 and 1.5% in 2025.

If you have a mortgage, you’re typically required to carry homeowners insurance, but you don’t have to stick with any particular insurance company. If you want to save on your home insurance costs, you could shop around for the best rate. Credible can help you compare home insurance rates from top insurance carriers all in one place.

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How to mitigate rising insurance costs

While rising insurance costs affect most homeowners, taking these steps can help lower costs, reduce risk and ensure you have proper coverage:

Shop for a new policy

Comparing insurance rates across multiple carriers is one way to lower costs. 

“This process is critical and can reveal potential savings, as each carrier uses proprietary formulas and algorithms to determine rates,” Guaranteed Rate said. 

Increase your deductible

By increasing your deductibles, you agree to take on a larger share of the replacement costs following a claim, typically resulting in a decrease in your premium.

“Even if an individual’s insurer has automatically raised the deductible at renewal, customers may still save money on their premium by further increasing their deductible,” Guaranteed Rate said.

Bundle your home and car insurance

Consumers have long turned to bundling homeowners and auto insurance policies as one way to lower costs. Depending on the state, many insurance carriers offer premium discounts of up to 5% – 20% if customers bundle their policies, according to the report.

Make sure you are covered properly

Homeowners who actively check their policy can review it to see if it meets their needs and if they are paying for the coverage they want. However, be careful not to reduce coverage to the point where you are no longer adequately covered.

“Escalating inflation and trade expenses have led to instances where homeowners facing a loss realize their coverage limits are inadequate for rebuilding purposes,” Guaranteed Rate said. 

If you want to make sure you have enough insurance and the right coverage for your needs, you can visit Credible to check out plans, providers and costs.

THIS IS THE #1 CITY FOR FIRST-TIME HOMEBUYERS, AND OTHER HOT US HOUSING MARKETS

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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