Why Your Home Insurance Is Getting More Expensive | Money Monday
- Homeowners insurance rates have jumped 27% in 5 years, driven by rising natural disaster costs.
- Review policies annually to find discounts and ensure coverage reflects home improvements.
- Don't ignore non-renewal notices - contact insurer and shop for new coverage to avoid gaps.
Homeowners are getting hit with higher insurance bills, and unfortunately, having a claim-free record doesn’t necessarily protect you from those increases.
During a recent conversation with Erica Campbell, finance and legacy expert Jini Thornton broke down why homeowners insurance has gotten so expensive and what people can do to avoid paying more than they have to.
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Thornton said homeowners insurance rates have jumped about 27% over the last five years. Renters aren’t off the hook either, with renters insurance increasing about 18% during that same period.
A big part of the problem is the number of natural disasters happening across the country. Storms and other severe weather events are becoming more costly, while the price of construction and materials continues to rise. Those costs eventually make their way down to consumers.
The good news is that homeowners aren’t completely powerless.
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Thornton’s biggest piece of advice is to actually sit down and go through your insurance policy every year. She recently did a review of her own home and auto policies and said homeowners should make it a regular habit.
“Your homeowners insurance is not a bill,” Thornton explained. “Remember, this is a thing that’s protecting some of your biggest assets.”
During that review, ask your insurance company about discounts. You may also have changes around your home that could affect your coverage or possibly lower your premium. A newer roof, security system or other improvements may be worth mentioning to your provider.
Thornton also said homeowners shouldn’t be afraid to shop around. That doesn’t mean switching companies every year, but it does mean checking to see if you’re getting a competitive price for the same coverage.
Things become even more stressful when an insurance company decides not to renew a homeowner’s policy. Thornton said this is happening frequently in places such as California and Louisiana.
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If you receive a cancellation or nonrenewal notice, her advice is simple: don’t panic, but don’t ignore it either.
Call your insurance company right away and find out why they’re dropping the policy. Sometimes the problem can be corrected. At the same time, start looking for another provider because the last thing you want is a gap in coverage.
Thornton also had two important reminders for homeowners. If you’ve spent more than $1,000 on home improvements in the past couple of years, let your insurance company know. You want to make sure those improvements are reflected in your coverage.
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She also recommends checking whether you have replacement coverage. If something happens to your home, you want enough coverage to rebuild it based on today’s construction costs, not what it would have cost years ago.
With insurance prices continuing to climb, Thornton’s advice comes down to one thing: don’t just pay the bill and move on. Know what you’re paying for, review your policy and make sure your coverage still makes sense for your home and your finances.
For more financial advice, follow Jini Thornton on social media at @janithornton.
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