Why are Homeowners Insurance Rates Increasing?

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Over the past few years, nearly every homeowner in the U.S. has seen an increase in their homeowners insurance premium. According to Money.com, an independent publisher, recent year-over-year premium increases have averaged 20%, and policyholders should expect to see at least a 10-15% increase in 2024.

Although individual rates are based on specific factors such as location, credit score, claims history, age of dwelling and deductible, some general trends are leading to higher rates across the board.

Increased Replacement costs

Most homeowners policies are designed to completely pay for replacing a home in the event of a total loss. Because of this, as the expenses of building a house increase, so will insurance premiums. The following factors have led to higher replacement costs in recent years:

  • Supply-chain issues
  • Labor shortage in the construction industry
  • Increase in building material costs

While these factors continue to affect rates modestly, they did begin leveling off in 2023 and should continue to do so in 2024.


Inflation has been a significant factor in recent years but is beginning to ease in many segments of the economy. However, homeowners insurance generally operates on a lagged timeline regarding inflation. Because insurance companies must gain approval for rate increases from state regulators and negotiations may take place during this process, the agreed-upon increase may not take effect until months after it is initially proposed. Because of this delay, policyholders should not expect much relief due to cooling inflation until at least 2025.

Increased claims and weather incidents

Approximately 1 in 20 homeowner policies have a claim filed against them in any given year. As this number remains steady, the number of claims being filed due to major weather and climate catastrophes, which typically involve higher payouts, has increased significantly over the last decade. In 2023 alone, 28 weather events caused at least $1 billion of damage each. Over the past three years, 60 of these $1-billion-dollar incidents occurred.

Insurance companies have increased premiums to recuperate losses and maintain reserves to pay out claims. In some areas that are particularly prone to wildfires and hurricanes, however, several companies have stopped writing new homeowner policies altogether, causing the market to become less competitive and rates to climb.

What can you do to impact your homeowners premium?

Although homeowners cannot control the major factors leading to premium increases, here are a few ways you can stabilize or lower your rate:

  • Review deductible amounts for potential adjustment opportunities
  • Bundle your policies with the same insurance carrier
  • Improve or maintain a good credit score
  • Replace an older roof to have more coverage options and possible discounts
  • Make renovations or install systems to protect your home

While all of these steps can potentially help lower your homeowners premium, the best action you can take when rates increase is to have a Scott Personal Insurance Account Manager review providers and coverage options.

Our Personal Insurance team is passionate about protecting your property while providing world-class service. We proudly partner with the world’s leading insurance carriers and will ensure you receive the right coverage at the best rate.