How Much Is Home Insurance Expected to Rise in 2021?

The landscape of home insurance is one that never remains stagnant. Customers’ needs change, the industry itself is ever-evolving, and external factors like the weather all converge to create a business that routinely shifts. As an agent, you need to stay aware of cost trends and advise clients while simultaneously closing sales. And our job is to make your business flow as smoothly as possible.

How Much Is Home Insurance Expected to Rise in 2021?

Homeowners insurance has risen steadily across the country, increasing by nearly 50% in just the last 10 years. Estimates for 2021 show homeowners can expect to pay hikes between 8 and 15% when their policies renew this year. Those who have made a claim in the last 12 months will likely see increases that exceed 15%.

Understanding Rate Increases

Two key culprits are responsible for these hikes: continued climate change and soaring lumber costs. The former drove more than 800 wildfires in the West last year that burned over six million acres of land. This gave way to billions of dollars in insured claims, and insurance providers are still reeling from these losses.

Similarly, a significant spike in tornadoes across the Mid-South as well as a record number of hurricanes making landfall on the East coast has generated still more claims. Other natural events like flooding and hail are additionally becoming more prevalent. They’ve also forced insurance providers to pass along their increased costs to homeowners.

Rising Costs in Materials

Add to this mix a leap in lumber prices – they’ve already jumped by 67% this year and 340% from 12 months ago – and you see a significant upward trend in the costs required to repair and rebuild homes. Other factors that can influence a homeowners policy rates include:

  • The age and location of the home
  • The presence of pets, including dog breeds perceived as aggressive
  • Special features like a trampoline or hot tub
  • The materials used to build the home

Review Clients’ Policies

Depending on where a person lives, and the weather conditions commonly experienced, a homeowners policy may provide limited coverage for location-specific events. It’s therefore a good idea to review policies with your clients to ensure they’re adequately covered.

A review should start with the home repair or replacement value; in standard policies, this is usually the same as the dwelling’s insured amount. But some policies contain clauses that increase the replacement to 125% or 150% of the home’s value. Be sure to include the increased prices for lumber when determining a home’s rebuild cost and make adjustments to the policy as necessary.

Different Deductibles for Different Damage

Certain weather-related events may fall under a different section of an insurance policy and also demand different deductibles. For instance, homeowners who live along the Gulf of Mexico are likely to have a hurricane deductible. Review these deductibles with clients so they can budget accordingly when adverse weather strikes.

You can service your customers to even greater effect by using a cloud-based rating platform like R8write. This dynamic tool supports traditional independent agencies in a variety of ways, allowing you to quickly produce accurate insurance quotes for customers whether they’re shopping online, over the phone, or face-to-face. Learn more by contacting R8write today.


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