Homeowners in every part of the United States are bracing for record-high jumps in their insurance rates. In states like Louisiana, experts are predicting a record-setting 28% increase! According to Insurify, one of the country’s largest providers of insurance data intelligence, increasing premiums are the rule, not the exception. Unfortunately, this bad trend is hitting states nationwide, from deep blue California to light red Colorado.
Chase Gardner, Insurify’s data insights manager, explains that fluctuations in profitability within individual states can heavily influence insurers’ business decisions. As companies assess their risk exposure, regions experiencing natural disasters or extreme weather patterns are particularly vulnerable to sharp premium hikes.
Colorado homeowners are now being hit with skyrocketing insurance premiums. Recent wildfires out West and severe hailstorms in the Midwest are fueling these increases. These mounting environmental challenges are increasing the cost of premiums, putting residents in an increasingly vulnerable economic position as they approach renewal.
California is no stranger to this trend. State Farm has already reduced its original request for a 30% increase in premiums down to a 13% increase in its revised petition. According to Insurify, California homeowners should expect the biggest increase in home insurance premiums this year. Even with all of this, they are still projecting a 21% increase. Today, the average premium in California of $2,930 is still quite high, though less than the national average of $3,520.
Scott Wilk, an independent insurance agent, noted, “The situation in insurance has actually been remarkably stable, considering everything that happened.” He offered his perspective on the still-unfolding crisis in California. Formerly, while he thinks the worst might be over, he cautions residents to prepare themselves for more “sticker shock” on the way.
In the country’s most southeastern state, Florida, continues to have the highest average home insurance premium by a mind-boggling margin at $15,460. This number highlights the struggle homeowners have experienced in a state that is often on the frontline of hurricanes and flooding. Iowa and Minnesota, though, are dealing with their own extreme weather and even climate-related challenges. As a consequence, they too are facing double-digit hikes in home insurance rates.
Vermont has the cheapest average premium at $1,248. Unfortunately, even this model case is not immune to displacement. In the wake of recent floods, costs are soaring. As Gardner pointed out, “An event like that in California just has a really significant impact on how much we project premiums to go up.”
The home insurance market is a leading indicator of a fast approaching new world in which home ownership is perceived more and more as an unstable asset. Gardner urged home insurance is becoming a more significant part of the monthly payment of housing for millions of Americans. “Home insurance is just becoming a bigger and bigger chunk of people’s monthly housing payments,” he stated.
This trend is an alarming indicator of how worried Americans are feeling in the homebuying process. Benjamin Keys, an economist who focuses on housing finance, said that the tide has really turned in how people feel about premium hikes. He remembered the days when customers would call in a storm about small increases in rates. “Early on in my career, pre-insurance crisis, if I had a customer’s rate go up by five bucks a month, I could be hearing about it and hearing complaints about it,” Keys said. “Now, people are just excited when their policy renews and it’s still in force.”
Because adjusting the rates can take upwards of 12 to 36 months for insurance companies, this further delay leaves millions of homeowners without help in sight as they continue to face skyrocketing prices. As Gardner noted, “These insurance companies are national companies, and this could affect things like their overall book of business.”