Homeowners Prepare for Rate Increases Later This Year

27 Jun

In most states, home insurance rates are headed up this year and homeowners should be prepared for further rate increases before the end of the year. According to a recent S&P Global Market Intelligence report, over 177 insurance carriers have filed requests for rate increases in 43 states, Arizona alone has seen 34 rate increase requests.

While natural disasters are a major factor in rate increases, economic volatility is also influencing rates. Recently, Bankrate ranked the states in regard to homeowner insurance rate increases and we thought it might be helpful to take a look at their findings.

How much are rates going up in 2022?

Insurance companies cannot just raise their rates at will, they must submit a rate increase request to each state’s Department of Insurance with details of the rate increase as well as explaining why they need the increase. Bankrate recently analyzed approved home insurance rate filing data from S&P Global Market Intelligence alongside and found the following.

According to their data, from January 1, 2022, to May 18, 2022, rate increases have been approved in almost every state in the country with the average rate increase hitting 4.48%. This translates into an average increase of $62 a year for the same coverage. California residents are looking at the largest increase with an average of 15.3 percent while Maine residents may actually see a rate decrease of 1.5%.

Top Five States

According to Bankrate’s data, California will see the highest rate increase at 15.3% but it should be noted that this increase will only hit about 8,800 policies. On the other hand, Washington state will see an average increase of 12 percent, but it will impact a whopping 105,454 policies. 

Here are the top five states for the largest approved rate increases this year:

StateRate IncreaseCurrent Average PremiumShop Rates
California+15.30%$1,177 Get California Home Insurance Quotes
Washington+12%$908 Get WashingtonHome Insurance Quotes
Arizona+11.10%$850 Get Arizona Home Insurance Quotes
Georgia+9.90%$1,362 Get Georgia Home Insurance Quotes
New Mexico+9.10%$1,126 Call Now for Rates: 1-855-980-6963

One the flip side of the rate increase coin, Maine and Delaware have seen rates decreases this year and the largest rate increase in the top five states for the lowest rate increase only saw a 1% increase. Here are the five states who have seen the lowest rate increases in 2022:

  • Maine: -1.5% 
  • Delaware: -1.35%
  • Michigan: +0.04%
  • Kansas: +0.2%
  • New York: +1.0%

Why are home insurance rates increasing?

There are a number of reasons that insurance rates are increasing, everything from climate changed fueled natural disasters to a shortage of labor and materials. Here are just few of the reasons rates are headed up.

Catastrophic losses

Climate change is fueling more severe and changing weather patterns which has led to more natural disasters in the last few years. Wildfires have increased in intensity and frequency as have tornados and hurricanes. 

According to the Insurance Information Institute (Triple-I) there were 97 events that qualified as catastrophic losses in 2021, which led to $92 billion of insured losses. As insurers must pay out claims for all of these losses, those costs are passed on to policyholders via rate increases.

Cost and availability of materials

Supply chain issues due to the pandemic are still impacting the cost and availably of materials needed for reconstruction. Recently, inflation has also been a major factor in the cost of materials. As insurers have to pay higher prices for materials, premiums have to rise as well.

Labor Shortage

The pandemic also led to the Great Resignation which has hit the construction industry pretty hard. According to a report by the Associated General Contractors of America (AGC), a shocking 1.1 million employees left the construction industry from February to April 2020. This labor shortage has led to higher pay rates which also results in higher building costs. 

Home insurance carriers leaving markets

Due to heavy losses in recent years some insurance companies are pulling back on the risk levels they will accept which has led them to pull out of certain areas or even leaving a state altogether. Florida has seen a number of insurance companies stop writing new policies or non-renewing existing customers if they find the risk level of the area too high. As fewer insurers service the market, premiums will be increased.

Tips to save money even if your premium goes up

While you may not be able to avoid a rate increase entirely, there are ways to lower your premium. Here are a few tips to help keep your homeowners coverage affordable:

  • Shop your coverage: This is probably the best way to save. Insurers rate risk differently which can result in dramatically different premium quotes. Get home insurance quotes from at least five insurance companies and shop your coverage once a year or whenever your insurer raises your premium.
  • Discounts: Insurance companies offer all types of discounts. Make sure you are getting all the savings you deserve by having your agent do a discount review to ensure all available discounts are being applied to your policy. 
  • Raise your deductible: The higher your deductible, the lower your premium. Insurers like it when you have more skin in the game, if you can afford to double your deductible you should see significant savings. Always choose a deductible that you can easily afford in the event you have to make a claim on the policy.
  • Improve your home: Insurers often offer discounts for improvements that lower your homes risk factors. Replacing your roof with wind and hail resistant materials, adding a security system, or making flooding improvements can all lower your premium. Check with your insurer for improvements that would result in a discount.

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