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Economic impacts on the insurance industry
2022-2023 Home insurance rates are likely going up for most homeowners regardless of who your carrier is or where you live. Just like the increasing cost of many things in the fallout of a global pandemic, supply chain issues, unfilled construction jobs due to COVID-19 disruptions, and more costly building materials are impacting the price of homes and home repairs. Likewise, the higher frequency of severe weather is causing more costly structural damage. These factors are having a dramatic effect on home insurance rates this year. The cost of car insurance is being impacted in similar ways. And that's not all.
“The U.S. property casualty insurance industry is facing significant pressure from rising economic inflation, legal system abuse, supply chain constraints, increasing catastrophic weather driving up losses, and historic cost increases for reinsurance and other forms of capital,” said Karen Collins, APCIA vice president, property and environmental. “The combined effects are resulting in the hardest market cycle in a generation. Commercial and personal property lines customers, particularly those in high-risk regions, may feel the effects of recent, elevated cost trends.”
How is weather impacting Home Insurance rates in Virginia?2022 was the eighth year in a row the U.S. suffered at least 10 catastrophes causing over a billion dollars in losses. As weather-related damages go up, so does the cost of home insurance overall. Virginia has had its share of severe weather over the last several years and climate change is playing a role. While our winters can be mild, ice storms, like the January 2022 winter storm, and sustained freezing temperatures take their toll on regional homes built for southeastern climates. While major hurricanes, such as 2003's Isabel, rarely threaten the commonwealth, heavy rains and wind from tropical cyclones or even the remnants of hurricanes can result in significant home damage. Tornadic activity, straight-line winds, and hail are common causes of home damage in some areas, and even earthquakes occur in Virginia. Northern Neck Insurance has also experienced an uptick in catastrophic home fires.
How are supply chain issues and home repair costs impacting home insurance rates?
There has been a significant rise in demand for home renovations and new construction in the housing industry. The result is inflated costs for materials and labor and a simultaneous shortage of skilled workers. The boom in the home real estate market has driven the value of homes through the roof. Global pandemic-related supply chain disruptions are still impacting the economy. As building costs go up, so does the cost to repair or replace homes. Thus, the cost to repair or rebuild a house from an insurance loss is much greater than two years ago. Home Insurance carriers have to raise the price of homeowners insurance to match industry trends and ensure future coverage.
What to do about rising Home Insurance premiums
Review your home insurance policy
While home insurance rates are rising everywhere, now is an important time to review your coverage. First and foremost, you want to make sure you are adequately covered. Your local agent can check your current coverage to ensure you’re getting the right protection for your individual needs. You can also let them know about any home improvements which may earn fantastic discounts or require more coverage, as well as life changes, such as marriage, divorce, or the death of a loved one. On the flip side, there may be coverages you no longer need and can reduce your premium.
Increase your deductibles
Another way to reduce your premium is to raise your deductibles. Your deductible is your out-of-pocket expense when you have a home insurance claim. If you choose to raise your deductibles, your premiums will be lower, but you'll pay more if you need to file a claim, so be sure to plan accordingly. You'll need enough savings to cover your deductible if you experience a loss.
Bundle your insurance
Purchasing multiple policies from one carrier can be a great way to save money on personal insurance. When you consider all your family's assets and insurance needs in one place, you can find the right combination of protection and buy it from the same insurer. Carriers usually reward households with two or more policies, like home and car insurance, with discounts. Bundled discounts may also apply to add-on coverages such as personal umbrella insurance, inland flood insurance, or cyber protection.
Multiple factors affect home insurance rates, but one of the best things you can do to keep the cost of home insurance down is to prevent a home insurance claim. Regular home maintenance and preparing your home for severe weather can help minimize the potential for damage. You can also ask your insurance agent about discounts for preventive measures such as adding deadbolts, smoke detectors and fire alarms, water sensors, and monitored security systems.
Control what you can
Current economic conditions are definitely challenging. We're all feeling the frustration. Many of these trends are outside of our control. Changing weather patterns, pandemic disruptions, and inflation are driving up personal insurance rates. It's a good time to consider what measures you can take to reduce your premiums and also make sure you have dependable financial protection in case you experience a loss to, most likely your biggest investment, your home. The benefits of consulting an independent agent are more important now than ever.
THE NORTHERN NECK INSURANCE INTEGRITY PROMISE — We pledge to provide straight talk and good counsel from our NNINS Virginia insurance experts through our blog. While we hope you find this to be a helpful source of information, it does not replace the guidance of a licensed insurance professional, nor does it modify the terms of your Northern Neck Insurance policy in any way. All insurance products are governed by the terms in the applicable insurance policy.