Two of the most common questions I hear from homeowners are:
"If my home isn't worth more this year than it was last year, why did my homeowners insurance premium go up?"
That's a fair question.
Another common question is:
"If I didn't file any claims, why did my homeowners insurance premium go up?"
Most people notice inflation when they buy groceries, fill up their vehicle, or pay for a doctor's visit. Home construction across Texas is no different.
Over the past several years, the cost of rebuilding homes in Texas has increased significantly due to higher prices for:
Insurance companies don't rebuild homes using yesterday's prices. Instead, they estimate what it would cost to rebuild your home if a covered loss occurred during your policy period.
As rebuilding costs increase across Texas, insurance companies often adjust the amount of dwelling coverage needed to help ensure your home remains properly protected.
The second major factor is the overall cost of insurance claims.
Even if you've never filed a claim, insurance companies are paying for covered losses every day across Texas. Severe hailstorms, wind damage, fires, freezes, and water losses all contribute to the overall cost of insuring homes.
As claim costs increase over time, insurance companies often adjust their rates to account for those higher costs.
That doesn't necessarily mean you've become a riskier homeowner.
Instead, it often means the overall cost of repairing and replacing homes has increased, and insurance companies must collect enough premium to continue paying future covered claims.
Homeowners insurance works by spreading risk across thousands of policyholders. Even if you've never filed a claim, you're part of a much larger pool that helps pay for covered losses when they occur. As the overall cost of those claims increases, premiums may increase as well.
The goal of homeowners insurance isn't to insure your home for the lowest possible amount. The goal is to make sure you have enough coverage to rebuild your home if the unexpected happens.
One of the clearest examples of how quickly rebuilding costs can change occurred during the COVID-19 pandemic. In roughly one year, lumber prices increased from around $350 per thousand board feet to more than $1,500. While lumber was only one part of the rebuilding equation, it demonstrated just how quickly construction costs can change.
Today's rebuilding costs are influenced by much more than lumber. Labor shortages, supply chain disruptions, building materials, and regional demand all play a role in determining what it costs to rebuild a home in Texas.
I can't predict what construction costs will be next year, but I can help make sure your homeowners insurance policy is prepared for them.
Possibly.
Many insurance companies offer some form of claims-free discount, although they don't all calculate those discounts the same way. If you're unsure whether your policy includes one, ask your insurance agent to review the discounts available on your policy.
It could.
I've seen renewal premiums increase, stay about the same, and even decrease from one year to the next. Insurance companies periodically adjust rates based on rebuilding costs, claim trends, severe weather, and other market conditions. As those factors change, premiums can change as well.
Insurance policies are filled with unfamiliar terms, percentages, deductibles, and coverage limits that don't always make sense. It's completely normal to have questions.
Whether you're reviewing your renewal, wondering why your premium changed, or shopping for new homeowners insurance in Texas, my goal is to help you understand your options—not pressure you into making a decision.
If you'd like a second opinion on your current policy or simply want someone to explain your coverage in plain English, contact me for a complimentary policy review.