Friday, January 26, 2024

Why Homeowners Insurance costs so much

By Tricia Zwirner

Homeowners insurance premiums have been increasing annually since the pandemic. In fact, the years 2019 through 2023 were the costliest for insurers ever….and it doesn’t look like 2024 will be any different.

Prior to 2019, the three most common contributors to the increase of a homeowners policy premium were the policy’s claim history, the property’s location, and the home’s replacement cost- all factors somewhat within the owner’s control. Fast forward to post-2019 when the top three contributors shifted out of the homeowner’s control to the pandemic, inflation and Mother Nature.

The Pandemic

The COVID-19 pandemic has not directly caused homeowners' premium rates to increase. However, there are a few factors indirectly related to the pandemic that have impacted homeowners' insurance rates:

1. Economic impact: The pandemic has had widespread economic effects, including job losses and reduced incomes for many individuals. As a result, some insurance companies may have experienced an increase in policy cancellations or non-renewals, which can lead to higher premiums for those who maintain coverage since premiums are spread amongst insureds.

2. Changes in property usage: With more people working from home and spending increased time indoors, there have been changes in the way properties are used. For example, homeowners may have set up home offices or increased the use of home appliances and electronics, which has increased the number of property damage and/or liability claims. Many insurance companies have experienced increased claim frequency and severity and have adjusted rates accordingly.

3. Supply chain disruptions: The pandemic has caused disruptions in supply chains worldwide, affecting the availability and cost of building materials, repair services, and replacement items. These disruptions have led to increased costs for insurers, which are reflected in higher premium rates.


Inflation refers to the general increase in prices and the decrease in the purchasing power of money over time. Here's how inflation has impacted homeowners' insurance premiums:

1. Rising construction costs: Inflation has led to higher costs for construction materials, labor, and other expenses related to repairing or rebuilding a home. As a result, insurance companies have increased premiums to account for the increased replacement cost value of the property.

2. Increased liability claim costs: Inflation can also affect the cost of liability claims. Medical expenses, legal fees, and other costs associated with liability claims have risen due to inflation. Insurance companies have adjusted premiums to cover the potential higher costs/frequency of liability claims.

3. Insurance company expenses: Inflation has impacted the operating costs of insurance companies, including administrative expenses, employee salaries, and other overhead costs. To compensate for these increased expenses, insurance companies have raised premiums.

Natural Disasters

Mother Nature has had the most significant impact on homeowners' insurance premiums due to the risks associated with natural disasters and severe weather events. Here's how Mother Nature has affected homeowners' insurance premiums:

1. Natural disasters: Events such as hurricanes, tornadoes, wildfires, earthquakes, and floods can cause extensive damage to homes and properties. Insurance companies factor in the risk of these events when determining premiums. Our weather in Maine has seen an increase in extreme weather events such as heavy rainstorms, wind speed, intense snowstorms, and occasional periods of high heat and humidity during the summer. These changes drive claim frequency which, in turn, has resulted in higher premiums.

2. Frequency and severity of weather events: Climate change has led to an increase in the frequency and severity of extreme weather events like storms, hail, and heavy rainfall. These events can result in property damage, which insurance companies consider when determining premiums.

3. Location-based risks: The geographic location of a property can affect premiums. For example, homes located in coastal areas may have higher insurance rates due to the risk of hurricanes or homes in flood-prone zones may have higher flood insurance premiums.

It's important to note that premium increases can vary depending on the insurance company, location, and individual circumstances. If you experience a significant increase in your homeowners' premium, it's recommended to contact your insurance provider or agent directly to understand the specific reasons behind the rate change and explore any potential discounts or adjustments that may be available to you. <

Tricia Zwirner is a State Farm agent celebrating her 21st year in Windham. She and her team would love to hear from you and can be reached via phone and text at 207-892-2864 or via email at

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