This month I received my annual homeowner's insurance rate statement from State Farm. For 2024 the rate is going from $104 per month to $125 per month. Thats a 20% increase over last year's rate. It adds $252 to the annual premium, which is now $1512. The home is located in the upper Midwest and is currently valued at $384k per Zillow. State Farm, California's largest insurer, announced it will discontinue coverage for 72,000 homes and apartments starting this summer. You would think that by cancelling high risk policies, rates could remain the same in lower risk regions, but it looks like that isn't going to happen. State Farm is also raising rates for everyone to compensate for their claim losses.
Reading a homeowner's insurance policy from State Farm is very confusing. You come away feeling like you are paying for things that you don't need. On my policy they add coverage for other structures, fuel oil release, and bed bugs, none of which I have. This year they added watercraft bodily injury liability, which I don't need. You get a lot of stuff you don't need built into your insurance policy. If you question them about it, they just tell you that it can't be removed. They also have a lot of fine print with exemptions for just about every situation imaginable. You can't be sure what level of coverage you are paying for.
I was looking at my auto insurance information on the State Farm website and noticed that they had one of my vehicles being driven 4000 miles per year and the other at 12,000 miles per year. The vehicle at 12k per year had a higher premium despite being 3 years older. Since I no longer have to commute to a job, I decided to change the mileage to 4000 on both vehicles. To my surprise, this reduced the semi-annual premium by $30. So, yes it makes a big difference how many estimated miles you have listed on your policy. It still doesn't cover the increase on the homeowner's policy, but it helps. It can be a challenge to find ways to minimize the amount you pay for insurance. Most of the time your only option is to raise your deductibles. I have only made one claim on my homeowner's insurance in 13 years. In 2017 a storm blew some shingles off the roof. I was able to get half the cost of a new roof covered under my homeowner's policy. But I have easily paid them back for that in premium payments.
So, you may be thinking, why don't you switch to a different insurance company? I've been with State Farm for a long time. They have local agents in town if I have a question. The few times I have had to file a claim, the experience has been fairly smooth. I have both home and auto policies with them, which gives me a discount. Switching to another insurance company would require switching both home and auto. I don't think the cost savings would be worth the effort. All insurance companies have their pros and cons, and they all can raise their rates for any reason. You could switch and get a lower rate, but next year you might end up paying a higher premium. I am not a big fan of insurance companies. It is a necessity that we have to endure. Most states now require proof of insurance to register a vehicle. No states have laws mandating homeowner's insurance. But a lender will require it if you have a mortgage.
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