Why home insurance goes up

Dwelling limits, rebuild costs, and wind or hail deductibles: where a home premium increase usually shows on the page.

Terms in this guide

Tap a term to read what it means.

Dwelling limit. The most the policy pays to repair or rebuild the house itself. Carriers often raise it at renewal to follow building costs, which can move the premium too.

Replacement cost. The policy pays what it costs to replace an item with a new one of like kind. Actual cash value, the other common option, takes off for age and wear first.

Other structures. Covers buildings on the property that are not attached to the house, like a detached garage, shed, or fence. It is often set as a percentage of the dwelling limit.

Wind and hail deductible. A separate deductible for wind or hail damage. It is either a set dollar figure or a share of the dwelling limit, so 2% on a $400,000 dwelling means the first $8,000.

All other perils deductible. The deductible for every covered loss that does not have its own, like fire or a burst pipe. It is the number most people mean by "my deductible".

Rate filing. The rates and rules a carrier submits to a state insurance department. When a new filing takes effect, it applies to policies in that state as each one renews.

Many people learn about a home insurance increase from the mortgage statement. The escrow payment goes up, and only then does anyone open the renewal packet. By that point the new term has started.

Home premiums rise for some of the same reasons auto premiums do, plus a few that belong to houses alone. The biggest of those is the dwelling limit, which can rise at renewal without anyone asking for it.

The dwelling limit follows rebuild costs

The dwelling limit is the most the policy pays to repair or rebuild the house. It is not the market value of the home or what you paid for it. It is meant to track what it would cost to rebuild at today's prices for labor and materials.

Carriers estimate that figure with building-cost tools, and many policies include an inflation guard that raises the dwelling limit by a set share at each renewal. When the limit goes up, the premium usually goes up with it. Other lines are often set as a share of the dwelling limit, like other structures, personal property, and loss of use, so they rise in step. One change at the top of the page can move four lines.

Other reasons a home premium rises

A state rate change. When a carrier's claim costs in a state go up, it files new rates, and they reach each policy as it renews.
Weather and wildfire losses in your area, which feed the rates for that territory.
What carriers pay for their own coverage. Insurers buy reinsurance to share the cost of large disasters, and when it costs more, rates tend to follow.
A claim on the policy. Carriers can see a home's claim history through shared databases, including claims on the address before you owned it.
The age and condition of the roof, which many carriers use in pricing.
A discount that ended, such as a new-home or claim-free discount.

When the deductible changes instead

Not every renewal change raises the premium. In areas with hail or windstorms, a carrier may change the wind and hail deductible from a flat dollar amount to a percentage of the dwelling limit. The premium can stay level or even drop while the amount you would pay first on a storm claim goes up by thousands.

A percentage deductible is worked out from the dwelling limit on the page, not from the size of the damage. And because it is tied to the limit, it grows each time the dwelling limit does. That is why a home renewal is worth reading past the premium line.

ExampleA homeowners policy on a different house, last term and this term

Line	Last term	This term
Dwelling limit	$380,000	$402,000
Other structures	$38,000	$40,200
Personal property	$190,000	$201,000
All other perils deductible	$1,000	$1,000
Wind and hail deductible	$1,000	2% ($8,040)
Premium, 12 months	$2,140	$2,486

Example numbers, for a different house than our other examples. The dwelling limit rose about 6%, the lines set as a share of it rose with it, and the wind and hail deductible became 2% of the new dwelling limit.

How the roof can show up

Some carriers add an endorsement that pays for an older roof on a schedule or at actual cash value instead of replacement cost. It may be listed only by its form name in the endorsements section. If a new form appears there at renewal, its name and number are what to ask about.

Questions to ask your carrier or agent

These are questions for your carrier or agent. The answers are about your policy, so they come from them:

Why did the dwelling limit change, and what rebuild estimate is it based on?
Did a rate change take effect in my state this term?
Did any deductible change, and what is the wind and hail deductible in dollars?
Was any endorsement added or removed, including one about the roof?
Did a discount end, or did anything about the home's details change in your records?

Next renewal, side by side

Halfstone puts this term's declarations page next to last term's, line by line, with a plain note on each line. A changed number or a missing form is easy to see before you call. See a Renewal Review, or start free with the policy that renews next.