Why Have Home Insurance Rates Started Going Up?

Posted August 10, 2022

If you’ve looked at what you’re paying for home insurance recently, you’ve probably noticed that since 2020, you’ve been paying more and more. This same experience has been happening to homeowners across the country, regardless of who their home insurance carrier is.

While paying more for something you need is never ideal, the good news is that these rising costs are designed to make sure your property is always adequately covered after damage or an emergency. And if you’re wondering why you’re paying more for home insurance, it comes down to the recent rise in construction costs.

Compared with just a few years ago, it would cost more now to rebuild your house than it would have when you initially purchased your policy. The recent global pandemic caused construction materials to cost more to purchase, and this cost is now being reflected in what you pay for home insurance.

To get even more specific, most home insurance policies have coverage referred to as Coverage A, which is what protects your home and any attached structures, such as a breezeway, deck, or your garage. Under Coverage A, your insurer agrees to cover the cost of rebuilding your property after a disaster up to the coverage limit of your policy.

When you bought your home insurance policy, the Coverage A limit that came with your coverage was used to calculate how much you would pay in premiums. This estimation was likely based on the cost of things like labor, debris removal, and construction materials. Now, due to the rise in cost of construction materials, how much it would cost to rebuild your home will likely exceed your policy’s Coverage A limit amount.

While switching home insurance providers may not do much to reduce your premiums at this time, it never hurts to reevaluate your policy and make sure you’re getting the best deal. To speak with an insurance advisor, contact us today at Legacy Insurance Partners.