Americans Are Getting Discounts on Homeowners Insurance

As America faces an ongoing home insurance crisis, many are finding ways to get around the price hikes by shopping around or even asking their insurers for a discount.

According to a new ValuePenguin survey, 54 percent of homeowner insurance policyholders shopped around for insurance in 2023, saving $474 on average each year. Meanwhile, 52 percent asked their insurers for discounts and were able to save about $472 yearly.

Millennials were the most likely to shop around at 57 percent, while Gen X was the least at 49 percent, reflecting a slight generational gap when it comes to insurance habits.

Today, the average cost of homeowners insurance can range from $600 to $3,000 a year, depending on the state you live in and your specific home.

"In the best-case scenario, shopping around, asking for discounts, or downgrading your coverage will reduce your premiums," Divya Sangameshwar, an insurance analyst at ValuePenguin, told Newsweek. "At the very least, it can make rate hikes more manageable."

However, across the board, 72 percent of those surveyed said they had a price hike last year, and 34 percent agreed that their premiums were more difficult to afford than before. Rate hikes were between 5 percent and 9.99 percent for 37 percent of the population, with 24 percent reporting 10 percent to 29.99 percent increases.

Homeowner insurance policyholders don't have much hope for the future, either, as three in four said they expect even more raises this year, and 26 percent said they're worried their home will become uninsurable.

While the price hikes are substantial, many homeowners don't secure lower rates because they don't know to ask, Realtors said.

"Many insurance companies are banking on the fact that people don't want to spend their free time comparing rates or sitting on hold so they can ask a representative for a discount, but as the data shows, it can save you hundreds of dollars," Cody Horvat, a real estate broker at The Scott Group in Chicago, told Newsweek.

According to Sangameshwar, climate change drove a significant chunk of the insurance hikes, with the number and severity of hurricanes, tornadoes, heatwaves and other harsh weather leading to more claims filed across the country. At the same time, insurers are facing rising construction costs.

Sangameshwar said there's reason to believe rate hikes will slow in the future, but non-renewal notices will continue to be a problem as insurance agencies leave costlier areas like California.

"While 2024 will see more rate hikes, the outlook is improving for insurers, who have used rate hikes and more caution about insuring high-risk properties to mitigate several years of losses," Sangameshwar said. "However, a growing number of homeowners will find themselves with a non-renewal notice in the mail, and they will need to shop for coverage among a smaller pool of insurers for a policy that will be more expensive and offer less coverage, or even get covered from their state's insurer of last resort."

Ultimately, inflation is the reason for the price hikes, said Alan Chang, the founder and president of Vested Title & Escrow.

"The basic cause of increasing cost of coverage is that simply everything is more expensive," Chang told Newsweek. "Wages are more costly now than ever. Materials are near an all-time high. Damage is simply more expensive to cover, so insurance needs to catch up to maintain historical profit margins or to prevent further losses."

Sangameshwar said the worst thing you can do when facing a rate hike is to drop your coverage.

"Suze Ormon saying she's going [to] 'self-insure' her oceanfront condo may work for a millionaire like her who can afford it," Sangameshwar said. "However, this option will put most homeowners at risk for significant financial losses when disaster strikes."

When you receive your renewal notice 30 to 60 days before the end of your policy period, Sangameshwar said that's the time to review the policy and shop around for discounts.

You might also consider making updates to your home to reduce the risk of extreme weather, whether that means installing a hail-resistant roof or hurricane shutters and trimming trees on your property.

Most of the homeowners who switched in the past did so after a bad claims experience or when they moved into a new home, which became common in the early pandemic years when interest rates were low, Sangameshwar said. But that trend is changing.

"Before the pandemic, for most Americans, home insurance was a set-and-forget thing," Sangameshwar said. "Americans were content to stay with their homeowner's insurance company for years, with less than 10 percent of our site users saying they switched insurers to save."