Homeowners Insurance Prices Soar as Weather Extremes, Inflation Bite

According to S&P Global Market Intelligence, home insurance prices increased by 11.3% on average across the US in 2023, with increases of more than 20% observed for owners in Arizona, Texas, and Utah. With rate hikes of between 2% and 4% last year, homeowners in Delaware, Hawaii, Mississippi, and Vermont had the least increases in insurance.

Even small hikes, however, add up to hundreds of more dollars in coverage per year, which is enough to annoy Americans who are still dealing with ongoing inflation.

The impact of the highest mortgage rates in years has already been felt by the housing sector, which has taken note. In a letter sent this week, more than 20 housing associations, among them the influential National Association of Home Builders and the National Multifamily Housing Council, urged the Biden administration and Congress to address the reasons behind insurance rate increases.

Particularly, those who offer affordable housing are having to pay far higher premiums; according to the organizations, approximately one in three policies saw rate hikes of at least 25% during the most recent renewal cycle. They also emphasized how higher expenditures are caused by natural calamities.

The housing group is advocating for the establishment of nationally backed homeowners insurance among other possible solutions.

States such as California, Florida, North Carolina, Oklahoma, and Texas that are prone to natural disasters have seen an exodus of insurers or a cease in the renewal of policies. Since there is a higher chance of wildfires, tornadoes, hurricanes, or earthquakes in certain places, insurers claim that issuing coverage there is too dangerous.

Scientists have linked climate change to an increase in the frequency and intensity of extreme weather events, which has resulted in larger payments by insurance and increased premiums for millions of Americans.

Insurance prices are rising mostly due to weather-related factors, but inflation is also a factor, according to Redfin Chief Economist Daryl Fairweather.

What Homeowners Can Do

To address rising insurance costs, homeowners can consider several strategies recommended by experts. One effective approach is bundling home and auto insurance policies. Combining these policies can often result in lower rates, providing some financial relief. Additionally, it's advisable for homeowners to shop around for quotes by contacting different insurers. This can help identify the best available rate and ensure that they are not overpaying for their coverage.

Investing in weatherproofing measures is another practical solution. Enhancing the home's resistance to weather-related damage by installing storm-resistant windows, improving landscaping, and optimizing drainage systems can potentially lower insurance premiums. By proactively making these improvements, homeowners might reduce the amount they spend on insurance premiums while simultaneously protecting their property against severe weather conditions.

Negotiating with insurance providers can also yield significant benefits. For example, one homeowner successfully reduced her annual premium to $2,400 through persistent negotiation. This highlights the importance of being proactive and engaging with insurers to explore potential savings. By employing these strategies, homeowners can better manage and potentially reduce their insurance costs.

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