Home insurance prices are rising even faster than inflation. Here’s why

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Homeowners insurance prices continue to climb in the United States amid skyrocketing inflation and natural disasters, with premiums up 12.1% compared to a year ago, according to a Policygenius analysis of internal policyholder data.

From May 2021 to May 2022, 90% of homeowners saw their quoted annual premium increase compared to the previous year. For homeowners whose premiums went up, the average increase was $134.

Key findings

  • In some states, home insurance costs have increased at more than double the rate of inflation. Over the past 12 months, home insurance premiums are up as much as 18.5% in Arkansas, 18.1% in Washington, and 17.5% in Colorado, more than doubling the rise of inflation during that same period.
  • The Sooner State is seeing the largest increases. Since last year, homeowners insurance premiums in Oklahoma are up $257 on average — the highest of any state.
  • The Empire State saw the smallest increases. Homeowners in New York saw the lowest increases at renewal since last year, with an average premium hike of just $56.

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Home insurance rates are rising faster than inflation in many states

From May 2021 to May 2022, the price of goods and services increased by 8.6% in the U.S. — the largest 12-month increase in over 40 years, according to the Bureau of Labor Statistics.

In the same time period, home insurance costs in all but one of the states we analyzed have either kept pace with or increased faster than inflation, with 13 states seeing an average rate increase over 50% higher than the current inflation rate and 3 states seeing increases more than double the rate of inflation.

You can see the average home increase by state here.

Arkansas saw the highest percentage rate increase at 18.5%, as policyholder premiums went up an average of $228 at policy renewal. The Arkansas Insurance Department has approved six companies for rate increases higher than 10% since the beginning of the year.

Washington state saw the second highest rate hike, with an average percentage increase of 18.1%. This increase comes after a ruling from the Washington Insurance Commissioner that temporarily banned insurance companies from factoring credit scores into rates, which in the short term, at least, led to most homeowners seeing higher rates.

Texas and Colorado also saw steep rate increases over the last 12 months, while Oklahoma had both the highest average annual premium and average premium increase of any state. Homeowners in these areas of the country face the compounding effects of higher rebuild costs in the wake of natural disasters — an occurrence that experts refer to as “demand surge” — combined with sustained supply-driven inflation.

 

New York saw the lowest premium increases

New York saw the lowest rate increase at 8%, making it the only state with a rate increase lower than the inflation rate. Inflation hasn’t risen as drastically in the New York City Metropolitan area as it has for the rest of the country, which may explain the lower rate of increase. [5]

Why homeowners insurance is more expensive in 2022

Home insurance rates have climbed the last year in large part because of record-high inflation and more frequent (and costly) natural disasters.

Homeowners insurance coverage limits are primarily based on how much it costs to rebuild a house. As construction costs continue to skyrocket due to delayed shipments and labor shortages, so too do home replacement costs. And this has a significant impact on homeowners insurance rates.

Premiums are also skyrocketing in certain areas due to increasingly violent natural disasters. As we approach yet another hurricane season that experts predict will have “above average” storm activity, many home insurance providers are increasing rates to account for anticipated losses and pass some of these costs onto policyholders.

Here are the main reasons why home insurance rates have seen a sharp increase since last year.

Rising inflation

Your home’s dwelling coverage limit is based on the cost to rebuild, including the cost of lumber, roofing, and other raw materials. Ongoing supply chain issues have pushed the price of construction materials up roughly 36% since the start of the pandemic, according to the National Association of Home Builders (NAHB). This has caused both home prices and insurance rates to skyrocket.

Severe natural disasters

Climate change has increased both the length and severity of the hurricane and wildfire seasons in the U.S., causing many insurance companies to increase rates or stop offering coverage in high-risk areas altogether. When there’s fewer companies doing business in a particular area, the ones left are forced to establish stricter underwriting rules and increase rates on new and existing customers.

Record catastrophe losses

There were 97 natural disasters resulting in $92 billion in insured losses in 2021, according to the Insurance Information Institute (III). This is up from 92 events totaling $74 billion in losses in 2020. As a result, insurers have had to increase rates to account for higher reconstruction costs in affected areas, and to make up for the record losses.

Labor shortages

Rising rebuild costs are in part due to the labor shortage currently plaguing the construction industry. A recent NAHB survey found that 76% of builders reported a labor shortage in October 2021, an all-time record and up from the previous peak of 65% in 2018. This shortage has collided with a heightened rebuild demand in recent years due to increased natural disasters, sending insurance premiums skyward.

Lawsuits

In 2021, there were over 116,000 lawsuits filed against home insurance companies in Florida over fraudulent roof repair claims. The losses stemming from these lawsuits have crippled the insurance industry in Florida, forcing many providers to increase rates significantly.

 

What homeowners can do about rising insurance costs

While it may be tough for homeowners in certain states to avoid a rate increase in 2022, there are several ways to get those premiums back down.

Change home insurance companies

Homeowners should aim to re-shop their home insurance each year to make sure they aren’t missing out on more affordable or better coverage with a different provider.

Bundle home and auto insurance policies

Many major insurance companies offer homeowners anywhere from 15% to 30% off their home and auto insurance policies if they bundle the two under a single policy package.

Ask about policy discounts

Many insurance companies offer discounts to homeowners who take steps to make their home safer, as this reduces their chances of having to file a claim. Adding a security system or smart home device to your home, installing a new roof, or fitting your home with any other protective devices can all net you a substantial discount.

Consider a higher deductible

Opting for a higher policy deductible is one of the easiest ways for homeowners to lower their home insurance rates. If you’re at fairly low risk of claims or you’ve never had to file one in the past, consider increasing your home insurance deductible.

Inflation-proof your coverage

In addition to higher premiums, inflation and rising rebuild costs could also be leaving your house underinsured. This means you may not have enough insurance to pay for a full rebuild in the event of a disaster. In light of rising inflation, it’s important to review your insurance policy at least once per year to ensure your dwelling coverage is at or above your home’s replacement cost.

Here are a few things you’ll want to check for or consider adding to your policy.

  • Inflation guard coverage: This automatically increases your dwelling coverage limit each year to account for rising construction costs. However, during periods of extreme inflation, these adjustments may not account for future increases, so make sure to review your limits. If you’re not sure whether your policy has inflation protection, ask your insurance agent.

  • Ordinance or law coverage: Increases your policy’s dwelling coverage limit to comply with local building codes. This coverage is especially important for homeowners in Florida, a state where residents are often required to demolish and completely rebuild properties that are more than 50% damaged.

  • Extended replacement cost coverage: Increases your policy’s dwelling coverage limit an additional percentage amount (usually 25% or 50%) in the event rebuild costs skyrocket after a natural disaster.

Methodology

Average premium increases are based on internal Policygenius data for 8,698 active home insurance policies quoted for renewal from May 20, 2021 to May 20, 2022. The percentage change in each state reflects the average difference between the original premium and the insurance carrier’s quoted renewal premium for each individual policy (final renewal premium for each policyholder may differ from the quoted premium due to policy or carrier changes).

Our analysis was limited to the 25 states for which we had a statistically significant number of policies, meaning a large enough sample size relative to the overall population in that state. If a statistically significant state had outliers, or policy premiums that were abnormally higher or lower than the main cluster of values, those policies were not included in this analysis.

Related:

This article originally appeared on Policygenius.com and was syndicated by MediaFeed.org.

 

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18 ways to stay ahead of inflation

 

No doubt, inflation is putting significant pressure on people’s budgets, and the future looks bleak when it comes to the potential of prices falling soon. The latest Consumer Price Index (May 11, 2022) revealed that consumer goods and services rose 8.3 percent (on average) over the last 12 months, noting shelter, food, airline fares, and new vehicles as the most significant contributors to this overall increase. And this isn’t just impacting lower-income families either—a recent study found that  31 percent of Americans making $100,000 and more struggle to afford their bills.

As prices continue to rise, here’s a look at beating inflation on everything from groceries to gas to household bills.

 

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Even if you’re not struggling to afford your bills, you can beat inflation by saving money on groceries. Doing so can free up some extra cash to put towards other things, like savings or investments. Here are a few tips for how to save money on groceries.

 

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Not only do you need to pay attention to grocery prices when shopping, but paying attention to how you shop can also result in significant savings at the food store. One study shows that shoppers who used self-checkout spent less on impulse than those who used the staffed lane. Another way to ditch impulse grocery buys is to use a handbasket rather than a cart. You don’t have as much space to toss in anything other than the necessities by doing this.

 

 

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Store brands have come a long way in the last decade, so you don’t have to worry about sacrificing taste and quality to save, and you’re looking at spending around 30% less. Many grocery stores and big-box retailers are also more likely to offer deals and coupons on their food brands, so there’s even more opportunity to save.

 

 

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Shoppers will often find fresh foods at up to a 70% discount when nearing their expiration date. These include meat, cheese, chicken, fish, and dairy. Ask your store manager where you can find these options and freeze what you don’t plan to eat right away.

 

 

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Saving money on restaurant meals is important for a number of reasons. For one, eating out is becoming increasingly more expensive as inflation continues to rise. Additionally, when you eat out, you’re not only paying for the food itself, but also for the service and oftentimes for the ambiance of the restaurant.

Here are some ways you can beat inflation by saving money on restaurant meals/takeout.

 

 

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Before heading out to eat, pick up a discount restaurant gift card. You can snag significant savings when buying bulk packs of gift cards from warehouse stores. For instance, you can get $25 off two $50 gift cards to Macaroni Grill and $20 off two $50 gift cards to California Pizza Kitchen, both available at Costco. If you don’t have a membership to one of these bulk stores, check out Restaurant.com for dining deals, as this site posts discounted certificates for restaurants based on zip code.

 

 

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Happy hour isn’t just for drinks, many bars and restaurants also offer deals on appetizers and select menu items, so this is a good time to dine out to save. Otherwise, look for early-bird or late-night dining deals as restaurants may discount meals when crowds die down. Meanwhile, families can save by searching for dining spots that offer free kids’ meals on certain days of the week. Download the Yelp app and tap on the Deals tab to look for dining and take-out specials nearby.

 

 

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Take the sting out of rising restaurant prices by using cashback tools to save money. Sites like CouponCabin.com offer cashback for food delivery services like $2.50 back at Uber Eats and $10 back at Postmates. Meanwhile, you can earn an extra 4% cashback when you pay for your food and drinks using the Slide app at participating restaurants and coffee shops, including The Cheesecake Factory, Chipotle, Dunkin Donuts, etc.

 

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In these (high) inflationary times, it’s more important than ever to save money on gas for your car. Rising prices at the pump can quickly eat into your budget, leaving you with less money to spend on other things. Here are a few ways to beat inflation and save on gas to keep more money in your pocket.

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Fuel prices can fluctuate daily, making it tricky to determine which gas stations have the best rate. However, you can quickly compare current prices per gallon using the GasBuddy app. Enter your location or allow the GPS feature to pull up your location and notify you where the least expensive gas is in your area or along your route.

 

 

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Pay attention to where you shop for groceries, as some offer fuel reward programs, allowing you to redeem points for discounts at the pump. For instance, Kroger’s loyalty program provides one fuel point for every $1 spent on groceries which consumers can redeem for discounts at Kroger gas stations and participating Shell stations. Other grocery stores offer similar programs, so don’t let those rewards go to waste.

 

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Cash is king when saving on gas, as card paying customers can expect to spend 10 to 15-cents more per gallon when swiping plastic. If you don’t typically carry dollar bills on hand, look for a gas rebate card to earn more cashback on fuel purchases. You can even double up on cashback by uploading pictures of your gas receipts using Fetch Rewards. You’ll earn points good towards gift cards to stores like Amazon, Target, or Walmart, which you can use to offset future spending needs.

 

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Inflation can have a serious impact on your household budget, making it more important than ever to save money on household bills.

Here are a few ways you can beat inflation by reducing your monthly expenses and keeping more money in your pocket.

 

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You likely shopped around for the best insurance rates when first buying your car or home, but you could be leaving money on the table if you haven’t compared rates. Run a quick price comparison using insurance comparison sites like TheZebra.com to see if you could snag comparable coverage for less. Increasing your deductible and bundling policies are other ways to reduce your premium.

 

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A recent study found that 90% of mobile users waste money on unnecessary unlimited data plans as they use much less than their plan provides. Review your data use and move to a lower-tiered data plan or save by switching to an online-only carrier like Mint Mobile, which offers plans for as little as $15 per month. Considering the average American cell phone bill is $70 for a single user, according to JD Power, that’s an extra $660 a year extra you will have to put towards your debt.

 

 

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Carrying balances across multiple credit cards makes managing debt difficult and more expensive, especially for anyone with a variable-rate credit card. As rates increase, monthly interest fees will get more expensive, making it harder to pay down debt. While transferring balances to a zero-percent interest credit card is one option, consolidating multiple balances into one personal loan takes the stress out of managing several different payment dates and comes with lower interest rates. You can even find debt consolidation loans for bad credit by comparing offers at sites like BadCredit.org.

 

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Inflation can have a serious impact on your household budget, making it more important than ever to make smarter choices when shopping.

Here are some ways to beat inflation when it comes to shopping.

 

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You may have already started to limit impulse purchases and unnecessary shopping, but when it comes to buying stuff you need, think outside the traditional retail shop. Instead, join Buy-Nothing Groups on Facebook to pick up free things and trade kid’s clothing at SwoondleSociety.com. Otherwise, look for gently used options online.

You can find secondhand home goods and furniture through:

  • Local listing sites like Mercari or OfferUp,
  • Previously-owned fashion at Poshmark or Thredup.com,
  • Gently-used sports gear at SwapMeSports, and
  • Refurbished gadgets at eBay or Best Buy to save anywhere from 30 to 70% compared to regular retail prices.

 

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While marketers want you to believe you need something new for the upcoming or current season, chances are you can wait. And holding off on making the purchase can result in considerable savings. Many consumer goods like clothing, holiday decorations, power tools, and even sporting gear have a season it’s most needed, like swimsuits for summer and snowblowers for winter. Hence, prices peak when the item is in demand. Buying toward the end of the season (i.e. after the December global holidays) may offer less selection, but you can reap bigger 50 to 70% off discounts.

 

 

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While hunting down coupons and comparing prices are two essential steps to finding the best deal on any purchase, don’t forget to track prices even after you buy. Many retailers offer price adjustments for recent purchases that go on sale for more money off within a week or two from the original date of purchase. While monitoring these price changes can be tedious, some tools work for you. For example, Edison Mail’s Price Alert feature will notify you when they detect a price drop for recent purchases. Also, they provide tips on how to request money back for stuff you already bought. This way, you never overpay.

 

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When it comes to booking travel, the best rates are often not the first ones to get displayed. Indeed, these days, one must hunt for the best deals. Here are some ways to beat inflation, and travel at the same time.

 

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When and where you go will ultimately impact your vacation spending, so be flexible about your destination and travel dates to save. Choose a destination experiencing its off-peak season to enjoy hotel, airfare, and entertainment deals. Traveling midweek will also offer deeper discounts on flights and accommodation. Set airfare and hotel price alerts using sites like Hopper and Trivago, and take a holiday where you find the deals.

SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

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Airfare and hotel will account for a significant portion of your overall travel budget, but even those daily activities and entertainment can add. Save yourself some serious dough by picking a destination that offers plenty of free things to do. For instance, the beach will keep your kids happy for hours, while a mountain getaway gives you plenty of options to play outdoors, including hiking, bike riding, fishing, star gazing, and more.

 

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You don’t have to dish out hundreds of dollars on a hotel or home rental— a little creativity can go a long way to help you save on accommodation.

For instance, you can get a free or deeply discounted overnight stay by:

  • Swapping homes via HomeExchange.com,
  • Renting a room rather than a whole house through VRBO or Airbnb; or,
  • Tackling chores or office duties in exchange for free stays at hostels via WorkPackers.com.

 

 

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While inflation is something you can’t change, there are still ways to beat it. The key is to be mindful of your spending and make strategic choices that allow you to save money. From automating your finances to taking advantage of freebies, these tips will help you keep more of your hard-earned cash.

 

This article originally appeared on RickOrford.com and was syndicated by MediaFeed.org

 

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