Why is My Home Insurance Going Up?

I know you’ve been to the gas pump, grocery store or even the drive thru --- it’s painful.

The classic “pay more and get less.”

But when it comes to home insurance all the classic inflation reasons apply, plus a few more industry-specific reasons and we’re spending more than a little time answering WHY IS MY HOME INSURANCE GOING UP?

I would suggest a few reasons:

1-INFLATION

2-CLAIMS

3-HUMAN BEINGS

INFLATION

I’m likely not going to reveal any new information about inflation, but I am just asking you to consider that insurance policies get more than their fair share in inflation since everything you insure has been affected by inflation these past couple of years.

Some things twice. Insurance gets the proverbial “double whammy”.

Take for example your home.

Since 2020, the cost of repairing homes has increased more than standard inflation. We are seeing new build reconstruction costs are up 25%+ and the general contractor labor prices are up 25 %+. Now combine those inflationary rates with increasing property values and add another 20%+.

So, not only is the market asking you to pay the inflation price increases, but insurance companies require you to BUY more coverage since your home is more valuable this year than last year. Higher insurance prices and buying more coverage; it’s a double whammy.

CLAIMS

 We used to blame our neighbors on the coasts, citing the wildfires out west, or the hurricanes in the south. But did you know that Minnesota and Iowa were some of the HIGHEST-RISK states for property insurance in 2022-2023? We are not safe from perils in the Midwest anymore.  It is OUR problem in OUR states, and even if your home didn’t have HAIL, you very likely know someone who has been through this.

HUMAN BEINGS

There is a human factor. I would love to blame invisible things like inflation or blame unpredictable weather as the only factors. But it is humans too. Can you believe that Human Beings can influence the rate increases too? Sometimes it’s false claims, whether it’s buying a property that already has damage and filing a new claim, or hiring an unprofessional from out of town to fix your damage after they crawl on your roof claiming to find damage (always hire a local contractor, someone you know and trust).

 Human factors are playing in the rate increases.

The Simple Math Problem

Question:

If an insurance company pays out $120 for every $100, they collect in premiums for four years in a row- what should the insurance company do?

Answer:

A.     Raise the Premium- charge higher prices

B.     Stop selling insurance in risky states like Minnesota and Iowa (but just until we figure this out).

C.     Leave the state- (examples in California, Texas, Florida, Iowa and Minnesota).

D.     Increase the Deductibles – encouraging customers to pay for the smaller things themselves.

E.      Change the coverage – if there’s damage on an old roof, insurance only pays less than if your roof               was new.

F.      Be really picky about accepting new customers.

G.     Make new rules to ensure legit claims, like requiring claims to be reported in 12 months.

Chances are your insurance company has probably chosen multiple answers to this question.

2024 is a tough home insurance market in Minnesota and Iowa. All of this equates to home insurance prices increasing - but it is the BEST time to have an AGENT.

Your local agent will visit with you and although we’re all answering the same questions, we can look at your specific risk, with your information. Since we’re independent we know the market. It’s not great right now.

We don’t want to move someone to a new company who is grandfathered in with excellent coverage into a new plan with restricted coverage. But we won’t know until we talk.  Many times, we can still better your situation. We love to look at your policy and explain the pros and cons of changing anything right now.

So why is your home insurance going up?

Call your trusted agent today, we want to talk to you.