Written by Bob Kelly, Agency Principal at PolicyVisor, with over 20 years of insurance experience

If your homeowners insurance renewal showed up and you thought:

“What happened? I didn’t even have a claim.”

You are definitely not the only one.

I have this conversation pretty regularly.

Someone has owned the same house for years. They didn’t move. They didn’t file a claim. Nothing obvious changed.

But the homeowners premium went up anyway.

The frustrating part is that your insurance premium isn’t based only on what happened at your house.

Insurance companies are looking at what it costs to insure thousands of homes like yours and, more importantly, what it costs when something goes wrong.

And those costs have changed quite a bit.

 

Your House Costs More to Rebuild Than It Used To

This is probably the first thing I explain.

Your homeowners insurance isn’t primarily concerned with what you could sell your house for.

It’s concerned with what it could cost to rebuild it.

Those are two very different numbers.

If a fire destroyed your house tomorrow, the insurance company isn’t buying the lot from you. The land is still sitting there.

We’re talking about removing debris, buying materials, hiring contractors, paying electricians and plumbers, and rebuilding the house.

When those costs go up, insurance companies have more money at risk.

That eventually works its way into premiums.

It’s also why you may notice the dwelling coverage on your policy increasing every year even though you didn’t ask anyone to change it.

That doesn’t necessarily mean the insurance company thinks your house would sell for that amount.

Replacement cost and market value are two different things.

We’ll get much more into that in another article.

 

Claims Cost More Too

Think about what it costs to repair almost anything today.

A roof.

Kitchen cabinets.

Drywall.

Flooring.

Electrical work.

Plumbing.

Labor.

If a loss that used to cost an insurance company $15,000 now costs $22,000, that matters.

Multiply that across thousands of claims and you can see the problem.

Insurance is basically a giant pool of money.

We all pay premium into the pool and claims get paid out of it.

If substantially more money is coming out, eventually more money has to go in.

That doesn’t make a 20% renewal increase any less annoying.

But it does help explain why somebody who hasn’t had a claim can still see their premium increase.

 

Weather Doesn’t Have to Be a Florida Problem

When people hear about problems with homeowners insurance, they tend to think about hurricanes in Florida or wildfires out west.

Pennsylvania obviously has a different risk profile.

But we still get weather.

Wind. Hail. Heavy rain. Trees coming down. Frozen pipes. Snow and ice. Severe thunderstorms.

One storm can create claims across an entire area at the same time.

A tree falling on one house is one claim.

A severe storm damaging roofs, siding, vehicles and homes across an entire area is something completely different for an insurance company.

And those losses ultimately become part of the pricing of homeowners insurance.

 

“But I’ve Never Had a Claim”

This is probably the part people dislike the most.

I understand it.

A client might say:

“I’ve been with them for ten years and they’ve never paid me a dime.”

Fair point.

But insurance isn’t really priced like a savings account.

My insurance carrier isn’t keeping my premiums in a little Bob Kelly bucket waiting for Bob Kelly to have a claim.

Your individual history absolutely can matter.

But the carrier is also pricing the overall risk it is taking in your area and across its entire book of business.

If claims are becoming more frequent or more expensive, rates can increase across a much larger group of customers.

So a rate increase doesn’t necessarily mean you did anything wrong.

Sometimes the entire pricing model is changing.

Roofs Are Becoming a Bigger Deal

This is something I think homeowners are going to hear more about.

Insurance companies care about roofs.

How old is it?

What material is it?

What condition is it in?

When was it last replaced?

A roof installed two years ago represents a different risk than one that is 20 or 25 years old.

And as roof claims have become more expensive, insurance companies have become more interested in the roofs they’re agreeing to insure.

Depending on the company and policy, roof age and condition can affect eligibility, pricing, deductibles or even how a future roof loss is settled.

If you’re buying a house with an older roof, don’t wait until two days before closing to find out whether the insurance company cares.

They might.

We’ll spend an entire article on older roofs later because there is a lot more to this one.

 

Insurance Companies Can See More Than They Used To

This surprises people sometimes.

Years ago, an insurance company relied heavily on what was on the application and maybe an exterior inspection.

Technology has changed that.

Carriers can use aerial imagery, property databases and other technology to learn quite a bit about a house.

They may identify a swimming pool, trampoline, detached structure, roof characteristics or changes made to the property.

I’ve had clients surprised when an insurance company knew something was in their backyard.

The answer can be pretty simple:

They can see it.

That doesn’t automatically mean there’s a problem.

It just means insurance companies have more information available to them than they did years ago.

 

Delaware County Has Its Own Challenges

Around Springfield, Media, Havertown and the rest of Delaware County, we have a lot of older homes.

That’s part of what makes the area great.

But an older house can create some additional insurance questions.

Older electrical systems.

Older plumbing.

Older roofs.

Finished basements.

Sewer and drain backup exposure.

Large trees.

Additions completed at different times.

None of those things automatically makes a house difficult to insure.

But it does mean two houses with roughly the same market value can look very different to an insurance company.

That’s why I don’t love this comparison:

“My neighbor pays $1,400. Why am I paying $2,000?”

I don’t know what your neighbor bought.

I don’t know their deductible.

I don’t know their roof age.

I don’t know their claim history.

I don’t know their dwelling limit.

I don’t even know if they have good coverage.

Two houses can be next door to each other and still be very different insurance risks.

 

The Market Is Starting to Get More Competitive Again

There is some good news too.

A number of insurance companies are starting to look for new business again.

That matters.

When carriers are trying to grow, they become more competitive.

They adjust pricing.

They open up underwriting.

They look harder for the type of customer they want.

And when insurance companies compete for your business, you have a better chance of winning.

That does not mean every company is suddenly cheap.

It does not mean every homeowner is going to save money.

But the market today may look very different than it did two or three years ago.

A lot of people bought or renewed policies during a very difficult insurance market and simply kept renewing them.

Their premium went up.

Then it went up again.

And they never checked whether another carrier had become more competitive.

If you have not shopped your homeowners insurance in the last few years, I think now is a very reasonable time to take another look.

Not because you should automatically switch.

But because there may be options available today that were not competitive the last time you checked.

That is one of the biggest advantages of working with an independent agency.

We can look at the market and see whether another company actually wants your business.

Sometimes the answer is yes.

Sometimes your current company is still the best place to be.

Either way, I would rather know.

Should You Shop Every Time Your Rate Goes Up?

No.

This is where I think people can overreact.

If your homeowners premium goes from $1,800 to $1,875, I’m probably not blowing everything up over $75.

There can be value in stability too.

But if it goes from $1,800 to $2,500?

Okay.

I want to take a look.

Maybe the current company is still competitive.

Maybe everybody is more expensive.

Or maybe another insurance company has a much better appetite for your particular house.

That’s one of the things I like about being independent.

We have the ability to find out.

 

Don’t Solve a Rate Increase by Gutting the Policy

This is the homeowners version of something I say about auto insurance all the time.

I can make a homeowners quote cheaper.

Raise the deductible.

Cut the water backup coverage.

Remove service line coverage.

Reduce endorsements.

Change certain replacement-cost provisions.

Eventually, I can get the premium down.

But did I actually find you a better insurance policy?

Maybe not.

If your rate went up significantly, I’d rather first ask:

Is another good insurance company willing to insure this house for less?

Then we can talk about deductibles and coverage changes if we still need to.

 

Look Closely at Your Deductible

I think deductibles should be a math problem.

Suppose changing your homeowners deductible from $1,000 to $2,500 saves $150 per year.

You’re taking on another $1,500 of risk to save $150.

You need to go ten years without a claim before you’ve saved that additional $1,500.

Maybe you’re comfortable with that.

Maybe you’re not.

Either answer is fine.

But now we’re making an informed decision.

I don’t like increasing a deductible simply because it makes the quote look prettier.

Tell me what I save and what I’m risking. Then we can decide.

 

What Should You Do If Your Homeowners Premium Jumped?

First, compare the renewal with your current policy.

Did the dwelling coverage increase?

Did the deductible change?

Did an endorsement change?

Did the carrier take a general rate increase?

Then look at the actual dollars.

A 10% increase sounds significant.

But 10% of a $1,000 policy is $100.

I’m probably not changing a good insurance relationship over $100.

On the other hand, if your renewal increased by $600, $800 or $1,000, I think it’s reasonable to see what else is available.

The important part is making sure we’re comparing the same coverage.

 

What We Look at at PolicyVisor

When someone asks us to review a homeowners renewal, I’m not just looking at the premium.

I want to know what the dwelling limit is and whether it makes sense.

I want to look at the deductible.

Is there a separate wind or hail deductible?

Do you have replacement cost on your contents?

How much water backup coverage do you have?

Do you have service line coverage?

How old is the roof?

Is there a pool or trampoline?

Do you have jewelry or other valuable property that should be scheduled separately?

Does an umbrella make sense?

Can we combine the home and auto more effectively?

Then I want to look at the price.

Because a $1,700 homeowners policy isn’t automatically better than a $2,000 homeowners policy.

I need to know what the $1,700 policy actually covers.

The Bottom Line

There isn’t one reason Pennsylvania homeowners insurance rates are increasing.

One of the biggest is pretty straightforward:

Homes cost more to repair and rebuild, and insurance claims have become more expensive.

Weather losses, underwriting changes, roof exposure, individual property characteristics and the insurance company’s own experience can all play a role too.

But the market is not standing still.

Some carriers are becoming more interested in writing new business again, and when insurance companies start competing harder for customers, that can create opportunities.

So if you have simply renewed the same homeowners policy for the last two or three years while the premium kept climbing, I think it is worth reviewing.

The answer isn’t necessarily to switch.

And it isn’t necessarily to accept every increase either.

Review it.

Understand it.

Shop it when the numbers justify shopping it.

If you haven’t shopped in a few years, now may be a very good time to find out what the market looks like.

And make sure that when you do save money, you’re not quietly giving away coverage to do it.

Want Us to Review Your Homeowners Insurance?

PolicyVisor is an independent insurance agency serving homeowners throughout Pennsylvania, including Springfield, Delaware County and the greater Philadelphia area.

If your homeowners renewal went up and you’d like a second opinion, send us your current declarations page.

We’ll review the coverage, explain what you have in plain English, and compare it with the insurance companies available to us.

Sometimes we find savings.

Sometimes we find coverage that needs attention.

Sometimes I look at somebody’s current policy and tell them:

“Honestly, this is pretty good. I wouldn’t move it.”

I’m fine with that too.

Disclaimer

This article is for general informational and educational purposes only and is not intended as individualized insurance, legal, financial, construction, or tax advice. Insurance pricing, underwriting guidelines, eligibility, deductibles, discounts, replacement-cost calculations, and coverage options vary by insurance company, property, location, and policy. References to common underwriting considerations do not mean that every insurance company treats a particular property characteristic the same way. Insurance coverage is determined solely by the terms, conditions, exclusions, endorsements, and limits of the policy actually issued. Nothing in this article binds, modifies, extends, or guarantees insurance coverage, claim payment, eligibility, or premium savings. Please speak with a licensed insurance professional regarding your specific insurance needs.