home insurance premium increases

Why did my home insurance premium go up?

Home insurance premium increases and how to mitigate:

If your home insurance premium increases, several factors likely went into determining your new rate. Some premium increases may be due to factors within your control, others are caused by issues that are affecting home insurance customers across the country. Here are the common reasons for price increases and some things you can do to save.

Pricing factors within your control

When an insurance company is trying to determine the cost of your home insurance policy, they consider multiple factors. Here are a couple of factors within your control:

  • You’ve made updates or renovations that have increased the actual value of your home. Finished your basement or installed another bathroom? When the value of your home increases, you may need to purchase more coverage than you had before, which could mean you’ll pay more for home insurance. But while some home upgrades may lead to a premium increase, others may actually help you save or qualify for a discount.
  • If you’ve recently made an insurance claim for your home and your premium increased, there are a few possible explanations. First of all, many insurers provide clients with lower premiums when they’ve remained claims-free for a set period of time. If you’ve benefited from this type of savings and you make a claim, your claims-free discount will reset. Additionally, after you’ve made several claims in a block of time set out by your insurer, you may have a surcharge added to your premium to offset the cost of processing multiple claims.

Pricing factors outside of your control

When your  premium goes up even though nothing about your situation seems to have changed, you may find yourself wondering why. We’re going to explain what’s happening behind the scenes that’s contributing to industry-wide price increases across the country. Here are a few of the major factors:

  • Extreme weather events and catastrophes are occurring more frequently across the country. As more and more wildfires, wind storms, hurricanes, tornadoes, and other damaging events occur, insurance companies are spending more to clean up the damage and get their customers back to normal. As the frequency of severe weather events increases, insurance carriers have to increase their premiums so they can afford to pay the claims that occur as a result.
  • Trends in your area show that you’re now at higher risk for burglary or other incidents. Insurance companies use advanced data analytics to predict the likelihood that you will make a claim. As your likelihood of making a claim increases, so will your premium. The cost of your home insurance premiums may go up if your insurance carrier predicts that homes in your area have become more prone to burglaries or damage from extreme weather events.
  • Emergency cleanup services, skilled trades, personal belongings, and homes in general have become more expensive, which leads to higher claims payouts. If your home or belongings need to be repaired or replaced, it will cost your insurance carrier more today than it would have in the past, thanks to inflation. Insurers have to take this into account when they calculate insurance premiums.

For an in person discussion about your renewal, and explanation about pricing, or anything insurance related, please contact an Aaxel Broker.

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