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Inflation Decreasing, but Insurance Increasing
On the heels of high inflation costs, homeowners across the U.S. are feeling new financial pain when receiving their annual home insurance renewal bills.
This in part due to rising costs of materials to repair or replace homes – the values of which have risen 37 percent nationwide over the last three years – and in part due to extreme weather – hurricanes, tornados, ice or hailstorms, and wildfires.
Analysts expect further insurance rate hikes this year and homeowners are feeling the impact. As reported in the New York Times, American homeowners have seen their bills for property coverage grow by 21 percent on average since 2015 with some individual state averages, like Florida, reaching as high as 57 percent with another 40 percent increase anticipated next year!
Home Insurance Rate Factors
Rates can vary significantly based on where a home is, how much coverage one needs, and personal factors of an individual, like one’s credit and claims history.
According to Bankrate.com rates for $250,000 in homeowner coverage, by state, averages from $3,659 per year in Oklahoma to $382 per year in Hawaii. Although the national average is near $1,500 per year, it is a bit deceiving due to the wide swings in premium costs.
- The top five states with the highest average rates include Oklahoma, Kansas, Nebraska, Colorado, and Arkansas.
- The bottom five states with the lowest average rates include Hawaii, Vermont, Delaware, Utah, and Oregon.
High risk has made insurance companies pull back in event-prone areas. Insurance companies State Farm and Allstate recently stopped accepting new homeowner insurance applications in California citing risks from catastrophes. In Florida, ten insurers became insolvent in the last two years due to losses and more than a dozen others either left the state or placed moratoriums on writing new business.
For those employees considering a relocation, homeowner insurance in some states could be a shock and should be considered when developing a relocation package.
What to Do?
Homeowner insurance is not required by state or federal law, but mortgage lenders will almost always require insurance to protect their financial interest and despite two out of every three homes in America reported to be under insured already, a sharp rise in costs may tempt more homeowners to cut coverage back further despite the risks.
Consumer Reports says now is the time to shop around and a good time for an insurance checkup, ask about any discounts for switching, be financially prepared for storms and have the right types/levels of coverage.
Mark Friedlander of The Insurance Information Institute suggests in a report by WUSF News that homeowners might consider bundling home and auto insurance, increasing deductibles for a lower rate and asking about available discounts. He noted that a higher deductible can lead to lower premiums, but one will be responsible to pay more out of pocket for a loss, so weigh the pros and cons.
Market Monitoring for Clients
NEI continues to be diligent about client costs for every single move, monitoring market and economic conditions to ensure the selected insurance provider offers competitive rates for clients who have inventory properties.
For more information, please contact your NEI representative.
The above article is provided for informational purposes only. Please consult your tax, legal, or accounting advisors before making any decisions or transactions.
Inflation Decreasing, but Insurance Increasing
On the heels of high inflation costs, homeowners across the U.S. are feeling new financial pain when receiving their annual home insurance renewal bills.
This in part due to rising costs of materials to repair or replace homes – the values of which have risen 37 percent nationwide over the last three years – and in part due to extreme weather – hurricanes, tornados, ice or hailstorms, and wildfires.
Analysts expect further insurance rate hikes this year and homeowners are feeling the impact. As reported in the New York Times, American homeowners have seen their bills for property coverage grow by 21 percent on average since 2015 with some individual state averages, like Florida, reaching as high as 57 percent with another 40 percent increase anticipated next year!
Home Insurance Rate Factors
Rates can vary significantly based on where a home is, how much coverage one needs, and personal factors of an individual, like one’s credit and claims history.
According to Bankrate.com rates for $250,000 in homeowner coverage, by state, averages from $3,659 per year in Oklahoma to $382 per year in Hawaii. Although the national average is near $1,500 per year, it is a bit deceiving due to the wide swings in premium costs.
- The top five states with the highest average rates include Oklahoma, Kansas, Nebraska, Colorado, and Arkansas.
- The bottom five states with the lowest average rates include Hawaii, Vermont, Delaware, Utah, and Oregon.
High risk has made insurance companies pull back in event-prone areas. Insurance companies State Farm and Allstate recently stopped accepting new homeowner insurance applications in California citing risks from catastrophes. In Florida, ten insurers became insolvent in the last two years due to losses and more than a dozen others either left the state or placed moratoriums on writing new business.
For those employees considering a relocation, homeowner insurance in some states could be a shock and should be considered when developing a relocation package.
What to Do?
Homeowner insurance is not required by state or federal law, but mortgage lenders will almost always require insurance to protect their financial interest and despite two out of every three homes in America reported to be under insured already, a sharp rise in costs may tempt more homeowners to cut coverage back further despite the risks.
Consumer Reports says now is the time to shop around and a good time for an insurance checkup, ask about any discounts for switching, be financially prepared for storms and have the right types/levels of coverage.
Mark Friedlander of The Insurance Information Institute suggests in a report by WUSF News that homeowners might consider bundling home and auto insurance, increasing deductibles for a lower rate and asking about available discounts. He noted that a higher deductible can lead to lower premiums, but one will be responsible to pay more out of pocket for a loss, so weigh the pros and cons.
Market Monitoring for Clients
NEI continues to be diligent about client costs for every single move, monitoring market and economic conditions to ensure the selected insurance provider offers competitive rates for clients who have inventory properties.
For more information, please contact your NEI representative.
The above article is provided for informational purposes only. Please consult your tax, legal, or accounting advisors before making any decisions or transactions.
