I've been getting a lot of questions about why Homeowners Insurance (HOI) has gone up so much in 2022, so I thought it'd be a good idea to explain some of the factors involved. To understand the reasons behind the increases, it's important to consider a few factors.
First, it's important to recognize that the overall cost of insurance has been on the rise in recent years. According to the National Association of Insurance Commissioners (NAIC), the average cost of homeowners insurance has increased by approximately 5% per year since 2016 (1). This trend is largely due to the increasing frequency and severity of natural disasters, such as hurricanes and wildfires, which can cause significant damage to homes and require insurance companies to pay out large claims (2).
Additionally, the cost of rebuilding a home has also been increasing. The NAIC reports that construction costs have risen by an average of 3.5% per year since 2016 (1). In other words, inflation. This means that insurance companies need to charge higher premiums in order to cover the cost of rebuilding a home in the event of a disaster.
Furthermore, insurance companies are also facing higher operating costs, such as the cost of hiring and training employees and investing in new technology to improve their services. These costs are passed on to homeowners through higher premiums (3).
However, if either your HOI or property taxes went up this year make sure to check in with your mortgage company about your escrow account. Any changes in either bill can throw off your balance and lead to receiving a cancellation notice in the mail. Which, at the end of the day is how an insurance company will let you know you owe them money. If you happened to get a cancellation notice then reach out to your insurance agent as soon as possible to resolve the matter.
In conclusion, the increase in HOI prices in 2022 can be attributed to a combination of factors, including the increasing frequency and severity of natural disasters, the rising cost of rebuilding a home, and the higher operating costs faced by insurance companies. While these increases may be frustrating, it's important to remember that homeowners insurance is an essential part of protecting your home and your financial stability.
If you feel that your HOI went up, or went up to much let me know. I'm sure we can find a more suitable alternative for you. You can also get more information or request a quote on my sister website www.myinsurect.com.
References:
"Trends in Homeowners Insurance Premiums." National Association of Insurance Commissioners. Accessed April 18, 2022.
https://www.naic.org/cipr_topics/topic_trends_in_homeowners.htm
"The Cost of Natural Disasters." Insurance Information Institute. Accessed April 18, 2022. https://www.iii.org/article/the-cost-of-natural-disasters
"Why Are Insurance Premiums Rising?" Insurance Information Institute. Accessed April 18, 2022. https://www.iii.org/article/why-are-insurance-premiums-rising