Why did the price of homeowners insurance go up in 2023?

If you’re a homeowner, you may have noticed an increase in the premium on your homeowners insurance in 2023. This trend is likely the result of several factors, including higher-than-normal inflation, continued labor shortages in the construction industry and an increase in building material costs. 

Although inflation decreased between 2022 and 2023, it’s still higher than historical norms and contributing to increased premiums. High-risk homeowners, such as those who live in areas prone to natural disasters, may be especially impacted by rising premium costs. In this article, we’ll explore the primary reasons for these rising costs and outline the factors that can impact your premium.

What factors contributed to the recent rise in homeowners insurance prices?

If you’ve noticed an increase in your homeowners insurance premium, you may be confused as to why you’re suddenly paying more to protect your homes and belongings. There are several contributing factors to the recent rise in premiums, including:

  • Extreme weather conditions: Extreme weather events including unexpected ice storms in Texas, worsening wildfires along the West Coast and stronger hurricane seasons, have all contributed to an increase in premiums in 2023. Since extreme weather can lead to many expensive claims being filed, an increase in natural disasters means more frequent incidents of policyholders filing claims all at once.
  • Higher reconstruction costs: Inflation has had a significant impact on the cost of construction and building materials. This means that when policyholders file a claim, carriers will require more money to complete any necessary repairs or rebuilds, so carriers have adjusted their rates accordingly.
  • Continued labor shortages: The construction industry, among several others, continues to experience a labor shortage, leading to higher labor costs when policyholders file a claim. Supply chain shortages in this industry also contribute to rising policy prices.

Factors That Determine Your Homeowners Insurance Premium

Carriers may consider a variety of factors when calculating your homeowners insurance premium. Aside from inflation and economic trends here are some factors carriers consider when determining your rates:

  • The location of your home: If you live in a location with a high risk of natural disasters or extreme weather events, like fire, theft, hurricane, ice storm or wind storm, you will be more expensive to insure.
  • The amount of coverage you need: The amount of coverage you need can also impact your premium, since the less coverage you need the lower you can expect your premium to be.
  • Your personal information: Carriers will look at your personal history and information, including the property you own, your credit history and insurance claims reports when calculating your premium.
  • The liability risks in and around your home: Liability risks, like trampolines and swimming pools, can increase the cost of your homeowners insurance since they can make it riskier for a carrier to insure you and your home.

SelectQuote Can Help You Navigate Homeowners Insurance Prices

Shopping for homeowners insurance during this time of rising prices might seem overwhelming, but SelectQuote can help make sure you get the right coverage within your budget. Our proprietary technology allows us to shop multiple carriers and policies at once to find the right one for your needs. This means you won’t need to complete a time-consuming intake call with each different carrier, since we handle all of that for you. 

Our licensed insurance agents will input your information once and you’ll receive quotes from many of the nation’s most trusted carriers allowing you to easily compare policies and make a well-informed decision. Whether you’re looking to switch, update or bundle your policy, we take care of the shopping for you. 

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