If you've shopped for homeowners insurance lately, you've probably experienced some serious sticker shock. What used to be a manageable annual expense has turned into a budget-buster for many homeowners across the country. So what's driving these sky-high premiums, and how can you find coverage that doesn't break the bank?
Let's break down why homeowners insurance costs so much right now and what you can do about it.
Why Homeowners Insurance Costs Keep Climbing
Several factors are working together to push insurance premiums higher, and unfortunately, most of them aren't going away anytime soon.
Climate-related disasters are happening more often. Hurricanes, wildfires, floods, and severe storms have become more frequent and more destructive. Insurance companies paid out massive claims in recent years, and they're passing those costs along to policyholders everywhere—even if you live nowhere near disaster-prone areas.
Construction and repair costs have skyrocketed. Remember when lumber prices went crazy during the pandemic? Material costs are still elevated, and labor shortages mean it's more expensive than ever to rebuild or repair a home. Your insurance company knows this, so they're charging more to cover potential claims.
Supply chain issues affect everything. Getting materials and replacement parts still takes longer and costs more than it did a few years ago. That uncertainty makes insurers nervous, and nervous insurers charge higher premiums.
Inflation hits insurance too. Everything costs more these days, and insurance is no exception. The replacement value of your home has likely increased significantly, which means higher coverage limits and higher premiums.
What to Consider When Shopping for Homeowners Insurance
Don't just grab the first policy you find or stick with the same company out of habit. Taking time to compare options can save you thousands over the life of your policy.
Understand what you're actually covering. Your policy should cover enough to completely rebuild your home—not just what you paid for it or what it's worth on the market. That's replacement cost coverage, and it's worth the extra money. Actual cash value policies might look cheaper, but they factor in depreciation, leaving you short when you need to file a claim.
Consider your deductible carefully. A higher deductible lowers your premium, but make sure you could actually afford to pay that amount if disaster strikes. There's no point saving a few hundred dollars a year if you can't come up with $5,000 when a tree falls on your roof.
Don't skip liability coverage. If someone gets hurt on your property, liability coverage protects you from potentially devastating lawsuits. Most experts recommend at least $300,000 in liability coverage, though $500,000 or even $1 million offers better protection.
Look at bundling options. Many insurers offer discounts when you bundle your home and auto insurance. Just make sure the bundled price is actually cheaper than buying separate policies from different companies.
Where to Find the Best Deals on Homeowners Insurance
Finding affordable coverage takes some legwork, but it's worth the effort.
Start by getting quotes from multiple companies. Three or four quotes give you a good sense of the market. Independent insurance agents can be helpful here since they work with multiple carriers and can shop around on your behalf.
Check with your state's insurance department for complaint ratios and financial ratings. A cheap policy from a company that fights every claim or takes forever to pay out is no bargain.
Ask about every possible discount. You might qualify for savings based on security systems, smoke detectors, new roofs, claim-free history, or even your credit score. Some companies offer discounts for staying claim-free for several years or for being a long-term customer.
"Homeowners insurance isn't just another bill to pay—it's protection for what's probably your biggest investment," says Mike Oddo, CEO of HouseJet. "We see too many people choose the cheapest policy without understanding what they're actually buying. The right coverage gives you peace of mind, while the wrong coverage can leave you financially devastated when you need it most."
The Real Cost of Cutting Corners
HouseJet recommends taking time to understand your coverage limits and exclusions before signing on the dotted line. Choosing inadequate coverage to save a few hundred dollars a year could cost you tens of thousands—or even hundreds of thousands—if you ever need to file a major claim. A policy that doesn't fully cover your home's replacement cost or that excludes common risks in your area might seem like a good deal until disaster strikes and you discover you're underinsured.
The bottom line? Homeowners insurance is expensive, but going without it or choosing the wrong coverage is far more costly. Do your homework, compare your options, and make sure you're getting protection that actually protects you.
