Average insurance premiums for homeowners rose about 27 percent nationally between 2019 and 2024, according to the Government Accountability Office, without adjusting for inflation. In some disaster-prone areas, the increases were substantially higher.
But higher premiums don’t always mean better protection. Higher deductibles and rebuilding costs, which have risen in part because of inflation, have left some homeowners facing thousands of dollars in out-of-pocket expenses.
Jennifer Taylor, a licensed public adjuster in Georgia, is founder and CEO of Claim Ready, a company that helps homeowners with insurance claims. She handled a fire claim in which the homeowner faced a $300,000 gap between the amount covered by the insurance policy and the actual cost of rebuilding.
Taylor said the house was probably already somewhat underinsured, but rising construction and materials costs made the shortfall worse. “That shortfall is the kind of surprise that turns a covered loss into a household-wealth problem,” she said.
To avoid this situation, homeowners shouldn’t wait for a disaster to find out whether they’re adequately protected.
Check your policy
Your insurance declarations page is where you can find out what coverage you actually have. The policy will show your limits and deductibles, in addition to the specifics of what is covered.
Dwelling coverage. “Coverage A” generally shows the amount available to rebuild your house. Compare that figure with the current cost to rebuild your house, not what you paid for the property or its market value. Verify whether your policy offers extended replacement-cost coverage that can pay beyond the listed dwelling limit.
Deductibles. Some policies have separate deductibles for wind, hail, hurricanes or wildfires, expressed as a percentage of the dwelling coverage. For homeowners who are unaware of this, a natural disaster could trigger large unexpected costs.
For example, Taylor said a 2 percent wind and hail deductible on a $715,000 home insurance limit would leave the homeowner responsible for $14,300 of a covered loss before insurance pays out.
Exclusions and additional coverage. Flooding is a common exclusion on standard homeowners policies. Water and sewer backups also may require additional protection. Older homes can face another problem: Rebuilding to meet current building codes may cost more than the policy covers.
Joshua Lavine, CEO of independent insurance agency Capitol Benefits, said homeowners should check that their insurer also has accurate information about their house. “Something a [homeowner] might not know to check is the home’s details on file, such as roof age, updates and square footage,” Lavine said.
Avoid sacrificing coverage
Homeowners aren’t powerless in the face of rising insurance premiums.
A variety of discounts are available on homeowners insurance, including for bundling home and auto policies and installing security systems, water-leak detectors and other protective devices.
Raising your deductible can also lower premiums, but that strategy has limits. “Raising a flat deductible can lower the premium, but only to an amount the household could pay from savings the next day,” Lavine said.
Lowering your insurance premium by reducing your dwelling coverage can backfire. Lowering short-term costs could leave you vulnerable to a major claim.
Comparing quotes from several insurers can be a simple way to reduce premiums while maintaining coverage. Just make sure you’re comparing apples to apples. Taylor recommends comparing policies side by side rather than focusing just on the annual premium.
Lavine recently worked with a homeowner whose annual premium had climbed from $1,945 to $2,751 over three years. After comparing insurers, his agency found a new policy costing $1,728 annually, saving the homeowner $1,023, or about 37 percent.
The new policy actually provided better property coverage, according to Lavine. “The goal should not just be to find a cheaper policy. It should be to make sure you have the right coverage at a competitive price,” he said.
Insurers have different preferences when it comes to the customers they cover, Lavine said. As a homeowner’s circumstances change, an insurer that once offered competitive rates may no longer be the best choice. Shopping around can point to a company willing to offer better pricing for the same home.
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