Why Did My Home Insurance Go Up?

No one likes a rate increase. We want to buy insurance at a reasonable premium and why can’t it stay there!?

You get your home insurance renewal and think, “Surely this will be fine, “ but then you open the letter. There it is, the new premium. Your heart sinks. It went up. Again. Now you are standing in your kitchen, holding a renewal packet, wondering why you even buy this at all. Then you remember why. Two very simple reasons: The first is that you aren’t brave enough to go through a Kansas storm season without it and because your mortgage company says you have to.

So why did your home insurance go up?

The frustrating answer is this: probably for several reasons at the same time. A recent Pew Research Center survey found that 71% of U.S. homeowners say their homeowners insurance cost has gone up over the last few years. In the Midwest, that number was 73%. If your renewal made you want to bury your head in the sand, you are not alone. Let’s talk about what is actually happening.

First, it may not be about you personally.

This is the part that feels unfair. You may have had no claims. You may have maintained your home. You may have lovingly cleaned your gutters, replaced your sump pump, and prayed for your roof before every storm. However, your premium can still go up.

Insurance rates are based on more than just your individual home. Carriers also look at the bigger picture: weather losses, claim costs, rebuilding costs, labor, materials, litigation, and what it costs to repair or replace homes in your area. In Kansas, we also have our own special little weather personality. Wind. Hail. Tornadoes. Ice. More wind. More hail. A random 72-degree day in February followed by the promise of Snowmegeddon if Dillon’s unstocked shelves are to be believed. When insurance companies pay out large amounts in a region, that loss experience can affect future rates for everyone in that area.

Your replacement cost may have changed.

One of the biggest misunderstandings in home insurance is the difference between market value and replacement cost. Market value is what your home might sell for.

Replacement cost is what it would cost to rebuild it. These are not the same things. You may think, “My house would sell for $300,000, so why is it insured for $425,000?”

Because the insurance company is not trying to buy your house. It is trying to estimate what it would cost to rebuild your house if something major happened.

That includes materials, labor, debris removal, contractor demand, code updates, and all the very unfun things that happen after a major claim. The Kansas Department of Insurance specifically warns homeowners not to confuse replacement cost with market value when reviewing home insurance. Unfortunately, rebuilding costs have not exactly been known for their steadfastness in the last few years. Covid, weather, and inflation have quite literally caused the perfect storm.

Your roof is probably a bigger deal than you think.

In Kansas, your roof is not just a roof. It is a weather helmet and insurance companies care very much about weather helmets.

Roof age, roof condition, roof material, prior damage, and how the policy settles roof claims can all affect your coverage and premium. The Kansas Department of Insurance lists roof condition and prior losses as factors that may affect homeowner underwriting and pricing . This is also why you may see more conversations about roof payment schedules, actual cash value roof coverage, cosmetic exclusions, or higher wind/hail deductibles. You may not think that 10 year old roof that seems like it is in great condition is anything other than perfect, but to the insurance company, that simply means a claim is coming with the next hail stone hit.

But they matter.

A cheaper policy is not always cheaper if it quietly changed how your roof claim would be paid.

Watch the wind/hail deductible.

This one deserves its own little spotlight. Many homeowners are used to thinking of their deductible as a flat number. It is not so long ago that we say home insurance deductibles at $500 or even $1000. Many policies now have a separate wind/hail deductible, and sometimes that deductible is a percentage of your dwelling coverage.

That means a 1% or 2% wind/hail deductible may not feel like a big deal until you do the math. If your home is insured for $400,000 and you have a 2% wind/hail deductible, that is an $8,000 deductible for a wind or hail claim. Eight. Thousand. Dollars.

So before you celebrate a lower premium, make sure you know what you are giving up to get it.

Actual cash value vs. replacement cost matters.

This is another sneaky one. Replacement cost generally means the policy is looking at the cost to replace damaged property with similar new property, subject to the terms of the policy. Actual cash value usually means depreciation is part of the equation.

In plain English: if your roof is older, actual cash value coverage may pay you based on the depreciated value of the roof, not the full cost to replace it. ACV isn’t inherently bad but it can be a very unpleasant surprise if you aren’t prepared for it. This is why we encourage people not to shop home insurance by price alone. The cheapest quote may be cheaper because something important changed. No one wants to learn that after the hailstorm.

Claims history can follow you.

Insurance companies may consider prior claims when determining eligibility and pricing.

This does not mean you should never file a claim. That is what insurance is for, but it does mean you should be thoughtful.

A $900 claim with a $1,000 deductible is not a claim. It’s paperwork.

Before turning in a claim, it is often wise to talk through the situation with your agent. Sometimes filing makes perfect sense. Sometimes it may be better to gather information first, get an estimate, and understand whether the damage is likely to exceed your deductible. The goal is not to scare people away from using their insurance.

The goal is to avoid accidentally creating a claims history over something that was never going to be paid anyway.

So what can you actually do?

You may not be able to control the weather, construction costs, or the insurance industry’s general chaos. You can control how well you understand your policy.

Here are a few things to review:

• What is your dwelling coverage limit?

• Is your roof covered at replacement cost or actual cash value?

• Do you have a separate wind/hail deductible?

• Is that deductible a flat amount or a percentage?

• Do you have water backup coverage?

• Do you have enough personal property coverage?

• Do you have jewelry, collectibles, firearms, equipment, or other items that may need special coverage?

• Have you asked about discounts?

• Is your coverage still appropriate for your home today?

• Is your agent ready and willing to educate you or are they peddling a product/price tag at you?

The bottom line…

If your home insurance went up, you are not alone. It may be because of weather losses, rebuilding costs, roof age, underwriting changes, deductible changes, or a combination of all of the above. The important thing is not to panic and slash coverage just to save money. That can feel good for about five minutes. Then a storm rolls through, and suddenly that “cheap” policy is not so cute anymore.

At Shepherd Insurance Group, our job is to help you understand what you have, what changed, and what options make sense for your real life. We cannot make Kansas weather behave. We can help you review your coverage, understand your deductibles, and make sure you are not accidentally trading important protection for a slightly smaller bill. Afterall, insurance is confusing enough already.

Call us and we can help. We think it should be easier and you should be able to avoid heart palpitations when grabbing that renewal notice out of the mailbox.