Why Is My Home Insurance So Expensive?
Why Are Homeowners Insurance Premiums Rising?
If your homeowners insurance premium has gone up recently, you're not alone—and you're certainly not imagining things. Across Texas and many parts of the country, homeowners have seen substantial increases at renewal, sometimes even when no claims have been filed. The truth is, there are a lot of moving parts driving this trend, from inflation to global weather events and industry-wide pressures.
At Wayne Lilly Insurance, we believe that the more you understand what’s behind these changes, the more empowered you’ll be to make smart decisions about your coverage. So, let’s break it down.
1. Rising Construction Costs Are Pushing Coverage (and Premiums) Up
Inflation in building materials and labor has had a huge impact on home insurance. Since 2020, the cost of basic materials like wood, concrete, and steel has jumped dramatically—by some estimates, up to 30% or more. Labor shortages in the construction industry have also pushed up the cost of rebuilding.
Because your policy’s dwelling coverage (Coverage A) is based on what it would cost to rebuild your home today, insurers are adjusting this amount upward to keep up with inflation. That means even if you haven’t changed a thing about your house, your coverage (and premium) may have increased. And since other coverages—like personal property and other structures—are often calculated as a percentage of Coverage A, the overall cost can snowball quickly.
2. More Frequent and Severe Weather Is Driving Claims—and Risk
From wildfires to hurricanes to winter storms, extreme weather has become more frequent—and more damaging. Climate change has increased both the severity and frequency of these events, creating major loss payouts for insurers.
Even if your area hasn’t recently been hit, you’re still affected. Insurance is pooled risk. The more widespread the losses—whether across Texas or in other parts of the country—the more the industry as a whole has to charge to stay financially stable.
3. Reinsurance: The Hidden Force Behind Your Premium
This is one of the most important—and often least understood—factors in rising rates.
Reinsurance is essentially insurance for insurance companies. When your carrier takes on thousands of home policies, they rely on reinsurance to protect themselves from catastrophic losses. But reinsurers are not regulated the same way your insurance company is. They operate globally, and they can:
Raise their rates with little restriction
Limit how many homes a carrier can insure in a given zip code
Require carriers to non-renew policies in high-risk areas
Withdraw support from entire regions
In recent years, reinsurers have pulled back from many markets, especially areas prone to hurricanes, flooding, or wildfire. That has forced many insurance companies to reduce how many policies they write—or even exit certain states entirely. These decisions often have nothing to do with individual homeowners, but the ripple effects are felt in higher premiums and fewer available options.
4. National and Global Disasters Affect Local Rates
Even if your home has never had a claim, your rate can still be affected by losses elsewhere. Wildfires in California, hurricanes in Florida, and winter storms in the Midwest all create ripple effects. When insurance companies or their reinsurers take large losses elsewhere, they have to raise premiums across the board to stay financially sound.
Insurers also monitor their combined ratio, which measures claims and expenses versus premium collected. According to a 2022 Insurance Information Institute survey, that number rose nearly 4% year over year—meaning insurers are paying out more than they’re taking in. That shortfall shows up in your renewal.
5. Fraud, Litigation, and Aging Homes Add Even More Pressure
Claims activity isn’t just up because of weather. Litigation costs, insurance fraud, and aging housing stock have also contributed. Fraudulent or inflated claims have increased, especially after major events, and the legal costs tied to those disputes raise the cost of doing business for carriers—another factor that impacts your premium.
6. Fewer Insurance Companies = Less Competition
As major carriers reduce their footprint or leave certain markets, the remaining companies are left with more risk and less flexibility. This limited supply of insurers creates a harder market: stricter guidelines, fewer underwriting exceptions, and higher premiums.
In many areas, especially those with higher catastrophe risk, it’s becoming harder for companies to even get reinsurance coverage—let alone offer it affordably.
7. What Can You Do to Help Control Your Insurance Costs?
While we can’t control the weather or influence global markets, there are steps you can take to help reduce your premium:
Audit your coverage. Coverages like Contents (Coverage C) and Other Structures (Coverage B) are often automatically set at high percentages of your dwelling coverage. If you don’t have many detached structures or expensive belongings, we may be able to reduce those levels without compromising your protection.
Raise your deductible. A higher deductible often translates to a lower premium, especially if you have savings set aside for emergencies.
Bundle your home and auto. Many carriers offer strong discounts for bundling, and it’s one of the simplest ways to save.
Update key features. A newer roof, security system, or fire mitigation features can sometimes qualify you for discounts.
Work with an independent agent (like us!). We’re not tied to one company—we have access to multiple markets and will always shop for the best value that fits your specific needs.
Final Thoughts: We’re Here to Help You Navigate the Storm
This current insurance climate is tough, and there’s no sugar-coating it—premiums are likely to remain elevated for the foreseeable future due to the factors above. But that doesn’t mean you’re powerless.
At Wayne Lilly Insurance, we make it our mission to help you stay informed, stay covered, and stay in control of your financial protection. We’ll walk through your policy with you, look for opportunities to adjust or improve it, and make sure you're not overpaying for coverage you don’t need.
If your renewal just hit your inbox and caught you off guard, let’s talk. We’re in your corner—and we’ll help you weather whatever comes next.
