Why Did My Homeowners Insurance Go Up?

As claim costs rise across the market, insurance premiums can rise too. At the same time, your own home’s replacement cost, recent upgrades, loss history, deductible and available discounts may also affect what you pay. Understanding these factors can help you make more informed decisions about your coverage and explore ways to help manage the cost of homeowners insurance.

Quick takeaway: A higher premium sometimes happens for reasons beyond your control. Homeowners insurance rates can increase for many reasons: because it may cost more to repair or rebuild homes, weather losses may become more severe, or your own coverage needs have changed.

Common reasons homeowners insurance premiums increase

It’s important to understand that there isn’t one standard increase from year to year. Premium changes depend on your location, your home and market-wide claim trends. It helps to start with the most common reasons rates change.

Severe weather and catastrophe losses

Natural disasters, like floods, wildfires, hurricanes, hail and other severe weather events, have significantly impacted the U.S. property and casualty insurance industry, contributing to $21.2 billion in losses in 2023.¹ These catastrophic events have caused widespread damage, leading to an increase in claims filed with insurance companies.

To cover the unprecedented losses and to maintain financial stability, most insurance carriers have had to raise their rates. The increase in premiums helps insurers manage the higher risk associated with frequent and severe natural disasters, giving an answer to the question, “Why did my homeowners insurance go up?”

Higher rebuilding costs

An important factor in the cost of home insurance is what it would take to rebuild your home after a covered loss. When labor and materials become more expensive, it can cost more to insure the same house because the potential claim cost is higher.

Anytime you upgrade materials or renovate your home, your coverage needs may increase, and the cost of your insurance could go up. If your home had a fire and needed to be rebuilt, it could cost more because of the upgrades and additions made to the property. It’s important that your homeowners insurance has sufficient limits to fully protect your property, and a home insurance increase is something to keep in mind as you improve your home.

Updated building codes and regulations

Construction methods and local requirements also play a role in claim costs. If building codes change, repairs and rebuilding may need to meet newer standards.

When building codes are updated, they often require homeowners and builders to adhere to new standards that can increase construction costs. These updated codes may require the use of more expensive materials, additional safety features or more rigorous construction techniques. For example, new regulations might require stronger foundations, enhanced fireproofing or better insulation. The expense to adhere to new building codes can increase the cost of insurance claims significantly, which in turn causes increases in the cost of homeowners insurance coverage.

Inflation, materials and labor

The construction industry is affected by supply, demand and inflation. When roofing, lumber, appliances or contractor labor all cost more, insurers may pay more to settle covered claims.

Whether it be supply chain disruption or a shortage of needed materials after a catastrophic event, construction costs can rise sharply at times. The increased cost of obtaining necessary building materials can drive up claim costs and result in increased homeowner insurance costs in the impacted area over time. Higher construction costs lead to increased replacement costs for homes, which can result in higher homeowners insurance premiums.

As material prices rise with inflation, so do the cost of repairs. Contractor wages and fuel costs to transport materials are examples of common expenses that can drive claim costs higher. This can lead to an increase in the cost of building and renovating homes, which can drive up home repair prices and homeowners insurance premiums.

Claims history

Your recent claims history can also affect your rate. If you’ve filed multiple claims in the past, insurance carriers may see that as a sign of higher future risk.

Consequently, your rates may be adjusted to reflect this potential higher risk. Even smaller claims can matter, depending on timing, frequency and the type of loss.

Changes to your property and liability risk

Certain additions to your property may increase the risk profile of your home. Features that make accidents more likely or make claims more severe can affect your premium.

Certain additions to your property, such as installing a pool or trampoline, may be considered “attractive nuisances” by insurance companies. These features can increase the risk of accidents or injuries, prompting carriers to raise your rates to account for the added risk.

Making coverage decisions and shopping around? Be sure to periodically review or update your policy and explore your options.

What you can do if your homeowners insurance premium went up

There are ways to save money on homeowners insurance without compromising on coverage. If your premium increased, these are some practical steps to review.

• Bundling insurance policies: One way to reduce costs may be to bundle auto and home insurance. At Amica, policyholders can save up to 30% off policy premiums when they bundle two or more policies.²
• Reviewing home discounts: Amica offers a variety of homeowners insurance discounts and incentives that may help lower your policy premium. If you’ve purchased a new home, or upgraded key systems like plumbing, electrical or roofing, you could qualify for a discount. Additionally, installing systems that prevent or mitigate losses can earn you a discount. This includes home security systems, water or gas leak detection systems, and other smart devices.
• Increasing deductibles: A higher deductible may lower your policy premium, depending on how high you choose to go. While this can be an effective way to reduce insurance costs, be sure to choose a deductible you’re comfortable paying if you need to file a claim.
• Regular checkups on your electrical, plumbing or heating systems can identify problems early, helping you avoid the stress of costly, unexpected repairs. This type of routine preventive home maintenance may help you reduce claims and keep your home insurance premiums lower.

You can also ask your insurer to walk you through your renewal and explain whether the change is driven more by market conditions or by your specific policy details.

Next steps for reviewing your homeowners policy

Now that you know some of the factors that can influence homeowners insurance rates, make sure to review your policy information regularly. Your premium may fluctuate with each renewal, whether or not you've experienced a claim. It’s important to make sure you are fully protected with adequate coverage and that you’re taking advantage of all of the policy discounts you qualify for.

It may also help to review recent home updates, changes in property value, liability risks and whether your deductible still fits your finances.

Questions? Give an Amica representative a call at 833-513-3881. We’re always available to discuss discounts and coverage options with you to help find homeowners insurance tailored to you and your budget.