Why did my homeowners insurance go up?

There are many reasons why homeowners insurance rates are climbing across the U.S.

As you might suspect, inflation is playing a significant role in increasing homeowners insurance costs.

The cost of building, maintaining, repairing, and remodeling homes has increased significantly. This means that insurers often have to pay out more to settle claims than they did in the past.

Insurers try to recoup those higher costs by increasing premiums.

Costly natural disasters such as fires and hurricanes also have led to more expensive claims. This is partly a result of “population shifts of more people living in harm’s way of catastrophes,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple-I).

Insurers in states prone to such disasters are hiking rates, sometimes dramatically. In some places — such as California and Florida — a handful of insurers are pulling out altogether.

Insurance claim fraud is another factor driving rates higher, according to the Insurance Information Institute. The organization says the problem has been particularly acute in Florida, which has passed legislation to try to curb the problem.

Finally, your rates may be climbing because of your insurance profile, such as the number of claims you have recently filed.

What causes homeowners insurance to increase?

Insurance companies need to make enough money to pay out claims. When they encounter new risks to profitability, they typically increase the cost of insurance to protect themselves from widespread losses.

“The recent rise in U.S. homeowners insurance costs has been driven by a combination of increasing natural catastrophe losses and extraordinary inflation coming out of COVID,” Friedlander says.

He adds that “legal system abuse” also contributes to rising costs.

Individual homeowners also might see their rates rise due to factors unique to their household and insurance profile.

If you have filed several claims in recent years, you can expect rates to climb. If you moved to an area prone to crime or natural disasters, your rate might be higher now than in your previous home.

How much should homeowners insurance increase each year?

There is no set amount that homeowners insurance costs “should” increase each year. Many factors can influence price trends both in the industry and individual homeowners.

Factors such as higher costs to repair and replace homes can cause a ripple effect that causes rates to climb nationwide. On the other hand, individual factors—such as filing many claims in a short period—can also cause rates to climb.

The bottom line is that insurers will adjust their rates to compensate for the risk of loss and to ensure the company stays in the black.

How much will homeowners insurance increase in 2024?

Even with the year more than half over, it’s still possible that homeowners insurance costs will continue to increase between now and December.

“Insurers assess numerous rating factors when determining the cost of home insurance,” Friedlander says.

Still, nobody can say precisely how much rates will have increased by the time the year is over. And, of course, even if you could pin down a number that represents an “average” increase, that doesn’t mean you should expect that number to apply to your situation.

Friedlander says factors that might impact how much you pay as an individual include your home’s age, location and square footage.

The home’s proximity to a fire station and fire hydrants also can play a role, as does your credit record and claim history.

“Natural disaster risks in your area also play a role in the cost of your policy,” Friedlander says.

Additionally, your policy deductible is a factor.

“A lower deductible means you will pay more in premium versus choosing a higher deductible,” Friedlander says.

Why is homeowners insurance so expensive?

Homeowners insurance is expensive because insurance companies must protect themselves against the higher cost of claims today.

A Triple-I analysis found that cumulative replacement costs related to homeowners insurance jumped 55% between 2020 and 2022.

“This was due to supply chain disruption, escalating construction costs and labor shortages,” Friedlander says.

In addition, more Americans are moving into areas with high risk of climate disasters, such as the Southeast and Southwest, Friedlander says.

“Losses related to natural disasters have increased tenfold from the 1980s to the 2020s,” he says. “Disaster losses along coastal areas are likely to escalate in the coming years, in part because of significant increases in building and development.”

Finally, what Friedlander characterizes as “legal system abuse” is pushing prices higher.

“Billboard attorneys are aggressively marketing their services to consumers to ‘sue first’ when trying to settle a claim versus traditional methods,” he says. “More litigated claims raise insurance costs for all homeowners.”

Is it normal for homeowners insurance to go up?

Yes, rate increases are expected, as costs generally increase every year.

In a time of high inflation—as we are seeing now—homeowners insurance rates should rise even more. Many companies monitor the Consumer Price Index and may base their rates on the direction of prices throughout the economy.

Rates can also change from year to year due to claims you have filed, changes you make on your property, an increase in storm activity and more. In some cases, rates may even go down; for example, if you have installed a new roof.

Does homeowners insurance go up after a claim?

Not every claim will cause homeowners insurance rates to climb, but your rates will likely increase if you file a claim. That's especially true if you file multiple claims within a short period.

Also, if you file a claim, your costs are almost certain to rise if you previously were getting a discount for being claim-free. Once you file the claim, you will no longer be claim-free, and you should expect to lose that discount.