Homeowners Insurance Rates Are Headed Higher

In a year that’s been rife with tornadoes and severe thunderstorms, premiums for homeowners insurance are on the rise. And forecasts are calling for a hurricane season that will be more active than usual. Insurers may try to boost rates by as much as 20% in areas where storms hit hardest.

Don’t look for a break because the value of your home has fallen. Premiums are tied to the cost of rebuilding a home -- not its current market value -- so skimping on coverage because your home’s value has shrunk could leave you underinsured. It doesn’t help that rebuilding costs have been increasing: As of late spring, the overall producer price index for construction materials was up 7.5% for the previous 12 months.

Some key moves could help you save on home insurance, says Michael Barry, spokesman for the Insurance Information Institute. One is to raise your deductible, provided you can pay more out of pocket if disaster strikes. You can save up to 25% by hiking a deductible from $500 to $1,000.

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If your auto insurance and homeowners policy are with different companies, see how much you could save by having a single insurer. Get several quotes, but don’t buy based on price alone -- look for a solid reputation and a below-average complaint ratio (find complaint info at https://eapps.naic.org/cis).

Don’t be shy about asking for discounts. You may be able to save at least 5% if you have installed smoke detectors and security devices in your home, or you have recently updated your plumbing or electrical systems. Retirees may also be eligible for discounts.

Lisa has been the editor of Kiplinger Personal Finance since June 2023. Previously, she spent more than a decade reporting and writing for the magazine on a variety of topics, including credit, banking and retirement. She has shared her expertise as a guest on the Today Show, CNN, Fox, NPR, Cheddar and many other media outlets around the nation. Lisa graduated from Ball State University and received the school’s “Graduate of the Last Decade” award in 2014. A military spouse, she has moved around the U.S. and currently lives in the Philadelphia area with her husband and two sons.