Why does my homeowner’s insurance premiums increase each year

Have you ever noticed that your homeowner’s insurance premium’s increase very slightly each year?

Why is this?

Inflation Guard

Every homeowner’s insurance policy has what is called an inflation guard built into their policy.

An inflation guard is on the policy to increase your Dwelling Amount each year by a small percentage to keep up with inflation like the rising construction prices.

When you have a homeowner’s insurance policy that is written at Replacement Cost Coverage,  you obviously want to make sure you have enough coverage to replace or rebuild your home in the event of a claim.

Without the inflation guard, your Dwelling Coverage would stay flat and not increase each year meaning the longer you stay with an insurance carrier the further away you would be from actually having the right amount of coverage.

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Premium Increases

Since the Dwelling Coverage would be increasing each year, your premiums will get increased slightly with it.

As many consumers think this is a negative and that their homes are already over insured. I encourage you to look at what the cost of construction is doing in New York.

Construction prices have been on the rise and continue to be. The last thing you want to happen if you have a major house claim is to find out you didn’t have enough coverage to fix or rebuild the way you want.

What’s Next?

It is important to make sure the replacement cost/dwelling coverage is accurate on your home. Make sure you are reviewing your insurance with an independent insurance agent to make sure you have everything you need before a claim happens

To learn more and get a review of your insurance policies, click the button below.


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