Multiple factors can impact the cost of homeowners insurance, sometimes causing it to rise even if the location of your home hasn’t changed. The main considerations that insurers look at to determine your premiums are your overall risk as a policyholder and your home’s replacement cost. If the cost of homeowners insurance in Thousand Oaks, CA, went up this year, there are numerous possible explanations for it.
I Don’t Live in an Area Where Tornadoes or Wildfires Are a Concern
Even if your home isn’t in a location that’s prone to natural disasters, the cost of insuring it can be impacted by outside factors, including national trends. Inflation can be a concern even when nothing significant has occurred locally, where you live. It affects the prices of everything, from groceries and meals at restaurants to gasoline. The cost of repairing or rebuilding your home after covered damage can increase, too, causing insurance rates to rise in tandem.
How Do I Determine the Coverage I Want?
When assessing options for homeowners insurance, you should consider requirements specific to your home. Key considerations include:
- Age of your home
- Location of your home
- Your deductible
- Cost of repair/rebuilding your home
What Factors Help Determine the Reconstruction Cost Estimate?
Estimating the reconstruction cost of your home can help determine the coverage you need for maximum protection. Here are important factors that you (together with your insurance agent) should look at when evaluating potential costs:
- Construction materials: Shortages of construction materials like roofing shingles, drywall, lumber, and wiring (copper) can trigger an increase in rebuilding costs. Between June 2020 and May 2021, the prices of these materials soared 26% on average. That was the sharpest 12-month hike ever captured in the National Association of Home Builders’ annual survey.
- Labor: This resource was in short supply throughout 2021, according to a report by the Association of General Contractors (AGC). About 89% of contractors told the AGC that subcontractors and skilled construction workers had become difficult to find. The labor shortage caused costly project delays, according to 88% of the surveyed contractors.
- Supply chain: The AGC reported various supply chain challenges impacting the production and delivery of crucial construction elements such as materials, tools, and appliances. These bottlenecks contributed to project delays and the uptick in construction costs.
Is There a Reason the Cost to Rebuild Might Be Different than the Market Value of My Home?
When disasters strike and destroy multiple homes, massive rebuilding projects usually ensue. These efforts add to the strain on construction resources, causing costs to increase further. Also, most people tend to rebuild bigger homes with stronger reinforcements, usually for safety and to comply with the latest building code regulations. As such, these homes are more expensive to rebuild and cover with homeowners insurance policies.
What Should I Consider If I Want More Home Coverage?
As you look to increase your home insurance coverage, you can explore ways to reduce your premiums. Here are some ideas to consider:
- Revisit your policy limits
- Increasing your deductible may lower your premium but can increase your out-of-pocket expenses should you file a claim
- You may qualify for an overall discount if you bundle your home and auto insurance policies
- Fortifying your home against theft and disasters may qualify you for a discount
- Keep your home and its components well-maintained, including electrical, plumbing, and roofing systems