Homeowners Insurance Industry Predictions for 2022

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Here are the trends that the homeowners insurance industry can expect to see for this year.

Key points

  • Smart home devices can protect a home by detecting and preventing damage before it occurs.
  • Insurance companies are investing in technology to significantly improve extreme weather forecasts, lowering the risk of financial losses.
  • More first-time home buyers are looking for innovative ways to combat climate change when buying a home.

The median home value in the U.S. has reached a historic high. For years, a combination of regulations, inflation, severe weather, and high building costs stemming from supply chain issues have led to higher insurance rates for homeowners across the United States. Here are the major homeowners insurance industry trends that experts expect to see for the coming year.

Smart home products and technology

Smart home devices can do more than protect your home and valuable property, they can also save money. A new Nationwide survey found that 66% of homeowners currently own at least one smart home device to reduce anxiety (42%) or make their homes more energy-efficient (33%). Smart devices can also detect and shut off water leaks. Homeowners can keep abreast of what's going on in their house via smart doorbells, smoke detectors, and thermostats.

One of the biggest trends is that by leveraging technology, homeowners can mitigate potential damage and achieve greater peace of mind. Sarah Jacobs, VP of Personal Lines Product Development at Nationwide, notes that homeowners are beginning to shift their perspective from getting reimbursed for property damage to using smart home products to prevent losses before they even occur.

In addition, insurers are investing in technology that will help them leverage satellite data collection, and machine learning models to significantly improve their weather forecasts. This can help insurers better predict and prepare for extreme weather, lowering the risk of financial losses. The combination of smart home products and technological modeling capabilities can lower premiums across the board.

Concern with climate-change driving decisions

According to Hippo's 2021 Homeownership Report, first-time home buyers are 318% more likely than existing homeowners to consider climate change considerations when buying a home. Homeowners are also using more resilient building materials such as concrete forms, bamboo, and new drywall to help better protect homes from flooding.

These innovative developments are making the hardened home -- using building materials to increase resistance to natural disasters such as fires -- a reality for more Americans in 2022. Homeowners can expect insurers to take hardened homes into account when underwriting policies.

What should homeowners look for in coverage?

Homeowners should shop around and find a policy that best fits their living situation. Not all homeowners insurance policies are created equal in terms of coverage and service. A home is typically the biggest purchase an individual will make, so homeowners should ask their provider about the services offered and discounts for reducing risks around the home, like having smart home devices activated.

Finding the right policy and additional riders needed takes careful consideration. But having the right level of protection will help reduce the possibility of big headaches down the road. With technology playing a larger role both for the homeowner and insurer -- despite the dramatic increase in home prices -- homeowners may find some reprieve with lower insurance premiums.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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