Caleb Meriwether, Haven Insurance Partners, visits with Dan Reaves, host of ‘The Dan Reaves Show,’ today, and each Wednesday at 3:30 p.m., to discuss all things insurance.
What to Do If Your Homeowners Insurance Rates Go Up
If your homeowners insurance premium increased recently, you’re not alone. Across the country, homeowners are seeing rising rates due to inflation, weather events, and higher repair costs. But you do have options—and understanding them can help you make the best decision for your situation.
1. Shop Your Policy
It’s often worth checking whether other insurance companies offer better pricing for similar coverage. Independent agents can access multiple carriers and compare quotes for you, while captive agents (like those from State Farm or Allstate) only represent one company. Even if you’ve been with the same insurer for years, market shifts may mean another carrier is a better fit now.
Things to consider: Are you getting quotes for comparable coverage? Are the carriers financially stable?
2. Adjust Covered Perils
Homeowners policies vary in what risks they cover. The most common is a “Special Form” policy, which covers all perils except those specifically excluded. However, some insurers offer “Named Peril” policies, which only cover specific risks (like fire, theft, or wind). These typically cost less, but offer narrower protection.
Be cautious: This option may not be ideal if you’re not sure which risks your home is most exposed to.
3. Change Your Deductibles
Raising your deductible can lower your annual premium. For example, moving from a $1,000 to a $2,500 deductible could significantly reduce your costs. This approach works well for homeowners who have savings set aside and don’t anticipate filing small claims.
Balance the risk: Make sure the deductible is an amount you could comfortably pay in the event of a loss.
4. Review How Claims Will Be Paid
Homeowners policies typically pay losses in one of two ways:
- Replacement Cost: Covers the cost to rebuild or replace damaged items.
- Actual Cash Value (ACV): Pays the depreciated value of the items.
Choosing ACV instead of replacement cost can reduce your premium but may leave you covering more out-of-pocket after a loss.
Understand the impact: Older homes or roofs may already default to ACV coverage depending on the insurer.
Final Thoughts
If your rate increase feels significant, don’t just accept it without reviewing your options. Take time to understand how your coverage works, what alternatives are available, and what trade-offs you’re comfortable making. Insurance is about managing risk—there’s no one-size-fits-all answer, but there are choices.
