If you’re worried about increases to your home insurance rates, you’re not alone. According to data from S&P Global, U.S. homeowners’ premiums rose by an average of 10.4% in 2024.
A number of factors go into insurance companies’ decisions to increase home insurance rates. Typical factors that encourage higher home insurance premiums include the number of claims filed, increased costs of doing business, and increased overhead costs.
Outside of these factors, economic forces like rising labor costs, tariffs, and inflation can all impact the cost of homeowners insurance. Read on for more insights into rising home insurance rates and how you can find ways to save.
Five Reasons Why Your Homeowners Insurance Costs More
1. Building Material Shortages May Impact Premiums
Ongoing shortages in common building materials—such as lumber, roofing shingles, and drywall—are contributing to rising homeowners insurance premiums. These materials are essential for repairing or rebuilding homes after damage, and when supply is limited, costs go up. The COVID-19 pandemic disrupted global supply chains, and while some sectors have recovered, construction materials continue to face bottlenecks due to high demand and labor shortages. As rebuilding becomes more expensive, insurance companies must adjust their rates to cover the increased cost of claims. Homeowners in areas prone to natural disasters may feel the impact more acutely, as higher rebuilding expenses directly translate into higher premiums.
2. The Rise of More Frequent, Expensive Disasters
Climate change has led to more frequent and intense weather events such as hurricanes, wildfires, and floods. For instance, California's wildfires have caused insurers to pay out billions, and Florida has seen a 231% increase in flood insurance premiums, reflecting heightened risks.1 And as risks rise, so do your insurance premiums.
3. Increased Labor Costs
The cost of rebuilding homes has surged due to inflation, supply chain disruptions, and labor shortages. These higher expenses are passed on to homeowners through increased premiums.
4. Supply Chain Issues May Impact the Effectiveness of Coverage
Global supply chain disruptions have not only increased the cost of building materials but also caused significant delays in obtaining them. This can directly affect the effectiveness of homeowners insurance coverage, especially after a claim is filed. For instance, if your home is damaged by a storm or fire, repairs could take much longer due to backlogged orders and contractor delays. While your policy may cover the cost of repairs and temporary living expenses, extended timelines can strain both your insurer and your personal finances.
5. Reinsurance Costs
Insurers often purchase reinsurance to protect themselves from large losses. However, the cost of reinsurance has been rising and even reached an all-time high in January 2024. These rising costs are transferred to homeowners in the form of higher premiums.
Other Reasons Why Your Home Insurance Rates Go Up
While rising premiums are often linked to broader economic and environmental factors, there are several personal or property-specific reasons your home insurance rate may increase. Here are a few additional factors that can impact your premiums:
Filing a Claim in the Last Year: Even a single recent claim can cause your insurance rates to rise, as insurers may view your home as a higher risk.
Aging or Damaged Roof: Old or deteriorating roofs are more vulnerable to weather damage, making them a red flag for insurers and a common reason for premium increases.
Changes in Your Credit Score: In many states, insurers use credit-based insurance scores to help determine rates. A drop in your credit score can lead to a higher premium.
Home Renovations or Additions: Improvements like a kitchen remodel or building an addition can increase the replacement cost of your home, which often results in a higher premium.
Installing High-Risk Features: High-risk features like pools, trampolines, and even certain types of wood-burning stoves may raise your liability risk, which can bump up your insurance rate.
Lapses in Coverage: If you've had any gaps in your homeowners insurance history, insurers may charge you more or view you as a higher risk.
SelectQuote Can Help You Compare Rates and Shop for Affordable Coverage
Home insurance premium increases aren’t uncommon, but there’s a solution if you find that they’re outpacing your budget: work with SelectQuote. Our licensed insurance agents can help streamline the home insurance shopping process by comparing rates and discounts from several trusted carriers at once. We work on your behalf, not the insurance companies, so you can feel confident that we’ll find you the right policy at the right price for you.
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