Every year, insurance agents receive calls from clients wondering why their homeowners insurance rates have increased over the previous year's. The reason is almost always tied to the Coverage A section of the homeowners policy. Coverage A—or Dwelling Coverage—protects against damage to or destruction of the dwelling and any attached structures, such as a deck, garage, fireplace, or chimney. This coverage pays to rebuild the home after a total loss. As a result, even if your home's value didn't fluctuate, the cost to rebuild it may have and your rates could have increased to compensate.

What Causes Homeowners Insurance Rates to Increase?

1. General Inflation

When general inflation rates cause prices to rise in every sector, your insurer may apply that to the cost of rebuilding your home. Because their possible payout amount increases, the insurance company will raise your rates slightly, in turn.

2. The Cost of Labor & Materials

Arguably the most important factor in the decision to increase rates is the cost of home reconstruction costs in your area. If labor and material increase in price—which they did nationally this year—it will cost more to rebuild the home and you'll pay more for homeowners insurance. Relevant materials include plywood, lumber, steel, aluminum, concrete, and even diesel fuel.

3. Remodeling or Additions

Have you remodeled the home or added an addition this year? If so, this could directly affect the replacement cost estimate, especially if you chose high-grade materials or significantly added to the square footage.

Because of general inflation or the rising costs of home reconstruction, your homeowners insurance rates may rise from year to year. If you're dissatisfied with your coverage or would like to see if you can lower your rates, contact Allstate Insurance Companies in High Point, NC. They've been serving businesses and residents throughout Guilford County for more than 20 years and specialize in home, life, business, and car insurance. Visit their Facebook page to view directions and office hours or call (336) 884-5636 to request an insurance quote.