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Why do home insurance premiums increase every year?
I noticed that my home insurance premiums have increased over the past few years, but I haven't filed any claims or made any late payments. Why does my home insurance premium increase every year?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Home insurance
premiums tend to increase every year to keep up with inflation and the age of your home:- Inflation: The value of your home rises during periods of high inflation. As the potential cost to rebuild your home becomes more expensive, so do your homeowner premiums.
- Age of home: Properties typically become more prone to structural failure and more expensive to maintain as they get older. As the risk associated with your house increases over time, so do your homeowners insurance premiums.
Homeowner insurance rates have been increasing at a slightly faster rate than inflation in recent years. Your home insurance rates could have increased more if any of the following apply:
- You live in an area with increasing natural disaster risk, like wildfires in California or hurricanes in Florida.
- You’ve submitted any claims against your policy that would affect your insurance score.
- Your neighbors have been making more claims that have an area-wide effect on premiums.
Expert tip: Consider adding
inflation guard coverage
to your homeowners policy to minimize the effects of inflation on your property rates. This typically reduces the current inflation rate’s effect on your annual premium increase by half. Some insurance companies also gradually increase the limits of the policy over time to accommodate for the increased replacement or repair costs of your home. If this is the case, it would have been disclosed before your policy started. You can check your policy declarations pages to see if the coverage limits have increased over time.
MORE: How to bundle home and auto insurance to save money
View full answer
- Gregory R.
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