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Writer's pictureCarl Bostic

Homeowners Insurance: A Guide to Finding the Best Coverage at the Best Price



Feeling the Burn?

It's no secret that homeowners insurance costs have been on the rise. Home insurance rates increased significantly in 2024, with some states seeing rate increases as high as 23%. An 18% increase from five years ago.  But don't panic - there are ways to find the best coverage at the best price. Let's break down the factors driving up costs and how you can protect yourself.

Why is Homeowners Insurance So Expensive Now?

  • Building Costs: The cost of materials and labor has skyrocketed, making it more expensive to rebuild or repair a home.

  • Natural Disasters: Hurricanes, wildfires, and floods have become more frequent and severe, leading to higher insurance claims.

  • Claims Increases: Areas with frequent claims can see significant rate increases, even for homeowners who haven't filed claims.

  • Fraudulent Lawsuits: In some states, fraudulent lawsuits against insurers have pushed up costs.

Finding the Right Insurance Company

  • Prioritize Claims Handling: When choosing an insurer, look for companies with a strong track record of handling claims efficiently and fairly.

  • Check Consumer Reports: Their ratings can help you identify top-performing insurers based on claims handling, customer service, and more.

  • Shop Around: Get quotes from multiple insurers to compare prices and coverage options.

How Much Coverage Do You Need?

  • Avoid Underinsurance: Don't skimp on coverage; aim to have enough to fully rebuild your home.

  • Don't Overpay: Don't buy coverage based on market value, which includes the land cost.

Additional Considerations

  • Loss of Use Coverage: This covers additional living expenses if your home is uninhabitable.

  • Extra Coverage Options: Consider add-ons like earthquake coverage, contents replacement cost coverage, and sewer backup coverage.

Protecting Yourself Beyond Homeowners Insurance

  • Umbrella Insurance: If your assets exceed your homeowners insurance liability limits, consider umbrella insurance for added protection.

  • Flood Insurance: Homeowners insurance doesn't cover floods. Get separate flood insurance if you live in a high-risk area.

Ways to Lower Your Premiums

  • Bundle Coverage: Combine your homeowners and auto insurance for potential discounts.

  • Raise Your Deductible: Opt for a higher deductible to lower your premiums.

  • Make Home Improvements: Upgrades like impact-resistant roofs or security systems can lead to discounts.

Filing Claims

  • Avoid Frequent Claims: Making too many claims can increase your rates or lead to non-renewal.

  • Weigh the Cost vs. Benefits: Don't file minor claims that might erase your claim-free discounts.

What Happens If Your Insurance Company Drops You?

  • Cancellation: This can occur within the first 60 days if you lied on your application or became a higher risk.

  • Nonrenewal: This can happen for reasons like frequent claims or the insurer leaving your area.

Resources for Finding Insurance

Remember: Even if you end up in a FAIR plan, keep shopping for better rates as new insurance options might emerge. By understanding the factors influencing your premiums and taking proactive steps, you can find the best coverage at the best price.

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