10 Reasons Home Insurance Rates Increase Every Year
You have probably noticed that each and every year the premium amounts on your home insurance seem to go up. Not to go too much off-topic, but that is why they should be paid by the year, for the entire year. That way, the price is locked in until the following billing year.
These increases can be attributed to many things, most of which are out of your control. Let’s take a look at them so you can better understand the reasons why home insurance rates increase every year.
Climate Change Events – Experts in the insurance industry can agree on one thing; the primary cause of increasing home insurance rates yearly revolves around climate change events. Fires, floods, storms, and so on are consistently wreaking havoc on the world and all the homes in it.
Global Warming – Because of the damage to the atmosphere, global warming has been causing some issues to homes and the contents within those homes. The sun’s UV rays are not blocked like they used to be, so they damage the materials that make up the home and any items the sun can beat down on inside of it.
Inflation – No matter what nation you live in, inflation increases yearly. There is nothing you can do about it, so this is an area of the home insurance rate hikes you cannot do anything about. Hopefully, your wage is going up along with it to cover the increase in costs across the board.
Lack Of Supplies – The pandemic has definitely caused a lack of supplies, but this has been an ongoing problem long before Covid-19 crashed through the countries of the world. More supplies are needed as more people buy, build, and remodel homes. It is basic supply and demand; the more demand there is, the more supply is required, so the higher the costs for those products will be.
Age Of Home – Every year, your home gets a little older, which makes it more fragile and prone to have issues. Issues that would cause you to file a claim, so the insurance carrier will increase the costs they hand down to you to ensure that any money they need to pay out for repairs is covered. Not all carriers increase their rates the same, so it is essential to use an online comparison platform and check around to find the best price on home and contents insurance.
Lack Of Workers
Cost Of Supplies – The lack of supplies, as discussed above, is not the only issue raising insurance costs. When those supplies are available, their cost goes through the roof. The $1 two-by-four is a thing of the past.
Renovations And Improvements – Not many homeowners do not make changes to the current buildings to better suit their unique needs. The value will increase each time you renovate or make simple improvements to the house. That is good for your personal wealth but not good for insurance premiums.
Population Shifts – People tend to move to areas that are not as crowded if they can afford to do so. This is causing an increase in the property values in most places, increasing the insurance policy costs offered to you.
Fraudulent Claims – The cost of living has increased, so many families cannot make enough money to stay afloat. Some of these people have chosen to file fraudulent claims to get some cash in their pockets, plus there are always people that find ways to continue their criminal activities. This comes back on you with higher insurance costs.
You should be able to see the pattern for all of these reasons. Insurance rates will continue to increase every year because the cost of supplies, and the values of homes, will continue to rise. For the insurance carrier, that means more costs to them when they have to pay out on a claim. Granted, that is what insurance is for. Still, they are in business to make money, so they will always increase the costs they hand you to ensure that they do not go into the red on their books.
It is a part of purchasing home insurance that you must be aware of and deal with. You must understand that the only thing you can do about it is check prices every year and go with the policy that works best for you and costs the least.