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January 23, 2024

Factors Influencing Home Insurance Premiums

Homeownership may be among the average person’s most significant milestones. Purchasing a home can provide security, stability and safety in the daily life of both the homeowner and their family. However, purchasing a home also requires responsible buyers to consider ways to protect their investment. This may entail understanding complicated and dynamic economic trends and conditions, such as those currently affecting the hard homeowners insurance market.  

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The Importance of Understanding the Home Insurance Market 

As homeowners seek to acquire and maintain adequate insurance coverage, they may need to account for rising premiums. Still, while higher rates can be difficult to swallow, responsible homeowners should not make the mistake of cutting corners on coverage. Given these complicated market conditions and the continuing need to prioritize adequate insurance, it may at least be helpful for homeowners to understand the upcoming forecast for the homeowners insurance landscape and how they may be able to limit increases in their rates. 


Factors Affecting Rising Home Insurance Rates 

As a part of the global economy, the homeowners insurance sector can be significantly influenced by many events and conditions, many of which are expected to continue to shape the market in 2024 and beyond, such as the following: 

  • Economic dynamicsThe homeowners insurance market can be directly impacted by ebbs and flows within the economy. Although inflation may have peaked well over a year ago in June 2022, its effects still reverberate today and rising costs play a significant role in the homeowners insurance market. For example, building material costs continuing to be at a premium and labor shortages in the construction industry have both contributed to higher repair and rebuild costs, thus increasing the cost of homeowners insurance claims.  

  • Natural disastersNatural disasters and extreme weather events, including wildfires, hurricanes and floods, pose significant threats to homes, and the frequency and severity of these events have increased in recent years. The aftermath of these incidents often leads to a surge in expensive insurance claims, prompting insurance companies to adjust rates in order to offset their costs. 

  • Reduced coverage optionsResponding to the impact of natural disasters and various market dynamics, several homeowners insurance companies have opted to withdraw from high-risk regions or modify their underwriting criteria. Consequently, homeowners in these areas are encountering challenges in securing coverage or facing elevated premium costs. 

  • Reinsurance rates—Insurance carriers often offset their risk by transferring some of it to another insurer, through a process called reinsurance. However, as claim frequency and severity continue to rise and homeowners insurance companies file their own claims to recoup losses, reinsurance companies must also raise their rates. 


We’re Here to Help 

At Wilkinson Insurance Agency, our dedicated agents are equipped with the extensive knowledge and experience needed to help homeowners understand market conditions and retain adequate coverage at ideal rates. Visit our website or call 615-672-4439 to learn more. 


This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information. 

Categories: Home Insurance