Should I Get a New Homeowners Policy if My Rates Go Up?

Putting homeowners insurance in place is a prerequisite to signing a mortgage loan. But even if your home is fully paid off or you're buying a home in cash, it's a very important thing to have.

Without homeowners insurance, you could end up liable for expensive repair bills if your property sustains damage, whether from a fire or an outside storm. Plus, you need liability coverage in case someone gets injured on your property -- such as if a delivery person slips and falls in the course of dropping a package off on your porch.

Unfortunately, the cost of homeowners insurance is never set in stone. And over time, your premium rates could rise.

You may be tempted to get a new homeowners insurance policy if you get word from your insurer that your premiums are going up. But whether a new policy will save you money will depend on your specific circumstances.

Understand why your costs are rising

There are certain changes you might make to your home that cause your homeowners insurance costs to increase. Putting in a pool, for example, is likely to result in higher premiums, because a large area of water in your backyard opens the door to not just flood damage, but injury.

If your homeowners insurance rates have risen due to a change you made to your home, you can try seeing if other insurers will charge you less money for coverage. But you may find that you're looking at higher rates across the board.

Even if you didn't make any notable changes to your home, it may just be that the cost of homeowners insurance has gone up in your general area. So in that case, you may find that your current coverage is still the most cost-effective, despite an increase in your premium.

You should also know that the more claims you file against your policy, the more likely it is for your premiums to rise. But even if you don't file many or any claims against your homeowners insurance, if other insured parties in your area do, that could raise your costs -- even though that might seem glaringly unfair.

It makes sense to shop around no matter what

Progressive says the average annual cost of homeowners insurance in its network ranges from $999 to $1,655 for policies effective on or after April 1, 2020. Your costs may be higher or lower, depending on factors like where you live and the size of your property. And your costs might also rise over time, whether you make changes to your home and file a lot of claims against your policy or not.

Regardless of why your homeowners insurance costs have risen, it's a good idea to do some rate shopping and see if another homeowners insurance company has a better deal to offer you. In fact, it's a wise idea to compare your choices for homeowners insurance coverage even if your costs haven't gone up. You never know when there might be a better deal elsewhere.

Along these lines, if you're not already bundling your homeowners and auto insurance policies, you may want to consider doing so. Going this route could save you money on both sets of premiums, making both homeownership and vehicle ownership less expensive on a whole.