My homeowners insurance in Tennessee went up 27% – and I’ve had no claims. What gives?

By Aarthi Swaminathan

‘I feel like I got punished with such a high increase’

Dear Big Move,

My homeowners insurance went up 27%, with no claims.

I have been with the insurance company for four years. I live in Tennessee.

I feel like I got punished with such a high increase. What gives? Are others seeing this large of a jump in homeowners insurance? Is there anyone in the insurance industry who can give me some insight?

I’m trying to understand how these rates are established. I also got flyers from two different insurance companies that posted rates that were a third of what I am paying. When I called for a quote, it was three times as high. Is that not a bait and switch?

Under what circumstances do people get those low rates? I’d love to know.

Annoyed Homeowner

Dear Annoyed,

You’ve hit on a hot-button issue that homeowners across the U.S. are facing. Home-insurance costs are becoming one of the biggest – often hidden – costs of owning a home. It’s such a big problem that even the federal government is looking at ways to address the costs.

The average annual home-insurance rate rose by about 20% between 2021 and 2023, according to Insurify, a Cambridge, Mass.-based digital insurance company. The company expects rates to rise by 6% this year. That’s roughly $2,522 in premiums paid per year. In some states, like Louisiana, rates are expected to increase by 23% over this year.

In Tennessee, the increases shouldn’t be as high: The projected change over 2024 in the state was 7%, according to Insurify, rising to an average rate of $2,635 per year. So what explains the fact that your rate went up by 27%?

I have a few theories.

Insurers are raising rates to keep up with the cost of building materials and labor, said Cassie Sheets, a data analyst at Insurify. The insurance industry has been losing money and shouldering heavy losses, which it is trying to recoup.

A number of storms have hit your state, including several in May, and that affects how insurers price their rates. “Damaging weather events, like the outbreak in Tennessee last December, are also increasing in frequency and severity,” Sheets said, referring to a series of tornadoes that hit Tennessee and Kentucky, destroying homes and businesses. Insurers have to price in this risk, and that is reflected in rising premiums.

That doesn’t mean you’re out of luck. There are a couple of ways you can bring your rate down.

You can update your home to make it more resistant to potential weather damage. Take advantage of any discounts insurers provide for upgrades such as reinforcing your roof or replacing your windows with hurricane-resistant ones, Sheets suggested.

If you’re not already doing so, buy your home and vehicle policies from the same insurer, which gets you a discount. The Insurance Information Institute suggests that when you bundle coverage, you’ll get 5% to 15% off your premium.

Regarding the offers you got from companies marketing one low rate but ultimately offering one three times higher, there’s a likely reason for that. “An insurer might initially quote a very low rate based on the information it has, but that rate could increase if a customer adds information to their application that changes the risk of insuring,” Sheets said.

This is where the fine print matters.

The flyer might contain some information that says you’ll have lower premiums if you opt for a higher deductible, for example. The deductible is the amount of money that you need to pay toward a loss before the company starts to pay your claim. If you raise your deductible, your premiums go down.

Shop around. Ask multiple companies for quotes to get a sense of what insurers are charging for the type of coverage you need.

To answer your question: Yes, it’s kind of strange that you saw such a big increase, but there could be a good reason for it. Try to get your insurance company to explain exactly why the rate is so high – and what you can do to lower it.

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-Aarthi Swaminathan

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08-09-24 1300ET

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