LendingTree, a comparison website for insurance, mortgages, home equity loans, and more, surveyed more than 2,000 U.S. consumers aged 18 to 78. Almost 20 percent of that group already received nonrenewable notices from their insurance companies. As a result, 8 percent opted to go without insurance this year.
“There are many factors why insurance firms may opt not to renew a home’s coverage, and those notices can be daunting for homeowners,” Divya Sangameshwar, insurance spokesperson for LendingTree, told The Epoch Times. “They can include rising home prices, the number of claims filed by homeowners, climate change, and increased risks.”
The national average cost of homeowners insurance is $1,516 a year, but it varies greatly from state to state. Colorado currently has the highest average annual rate, at $2,900. “The wildfires and hailstorms in Colorado caused billions of dollars in damages, which has led to significantly higher premiums,” Ms. Sangameshwar said. Nebraska, Texas, Oklahoma, and Kansas have the next highest average premiums, all greater than $2,200.
Among the states with the lowest average annual home insurance rates are Wisconsin, Delaware, New Hampshire, Pennsylvania, and Vermont—the lowest, at just $680.
The age and size of a home, plus the amount of coverage a typical homeowner buys will also affect the costs, but Ms. Sangameshwar predicted that prices won’t be any lower in the future.
“If you live near the coast, there’s been unprecedented rate hikes due to storms and flooding,” she said. “The costs can become so much of a shock that homeowners often consider moving because the insurance premiums are now making their home unaffordable.”
JoAnne Murray, president of Allan Block Insurance in Tarrytown, New York, agreed. She recently quoted insurance for a $2 million Long Island residence at $48,000 a year—up from just $6,000. A Florida client’s premium was quoted at a staggering $340,000 a year for a $7 million coastal home—up from $26,000.
“In the 40 years that I’ve been doing this, I have never seen it this bad,” Ms. Murray told The Epoch Times. “One of the biggest factors affecting the escalating costs is wind damage. Hurricanes and tornadoes can destroy a home in just minutes. Trees falling on homes can also cause significant damage.”
In addition to the increased cost of claims, inflation has also sent the costs of construction materials soaring. “As a result, it could cost more and take longer to make repairs or rebuild, and that means people have to stay in hotels or rent longer, adding to the costs of their claims,” Ms. Murray said.
An independent agency, Allan Block Insurance can compare and present policies from 12 different major insurance carriers.
“And many of these companies also have to buy insurance from re-insurance firms, if they have a dollar limit as to the amount of claims they can handle,” Ms. Murray said. “Because of the number of claims, the cost of the re-insurance also increased, leaving the insurance firms to pass that cost along to the consumers.”
Other areas of the country—particularly in the West—often deal with wildfires, another factor increasing insurance rates.
“I think we’re going to see a situation where rates continue to increase until there’s a comprehensive solution to the problems like updating building codes to deal with climate disaster or stop allowing homes to be built in areas where there’s a high risk of a disaster,” Ms. Sangameshwar said.
Additionally, there may need to be a mindset change factored into the homebuying decision when planning where to live or what amenities are needed. A pool, for example, can be a big liability and will cause insurance costs to rise much higher, so potential home buyers might want to rethink that risk when budgeting their expenses.
“The worst thing a homeowner can do is drop their coverage—it puts them at risk of sizable financial disaster, and significantly higher premiums in the future,” Ms. Sangameshwar said. “Doing nothing is also a bad idea. Using the 30- to 60-day notice period to review, shop around, or negotiate for a new policy is the only way homeowners can make their insurance rate hikes or nonrenewals more manageable.”
Insurance experts agree that policyholders should compare rates to determine where they can get the most affordable price for the coverage they need. The survey found that 87 percent have not updated or changed their current home insurance policy in more than a year, and 49 percent reported holding onto their current policy for more than five years.
Of those surveyed, 37 percent saw their insurance costs rise by 5 to 10 percent this year, while 24 percent experienced rate hikes of 11 to 30 percent. More than 50 percent now want the federal government to intervene and regulate homeowners insurance rates.
Ms. Murray agrees that the idea of having a federal or state insurance agency available for those who cannot obtain insurance is a good idea. Florida has already set that example with Citizens Property Insurance Corp. It was created by the Florida Legislature in 2002 as a nonprofit, tax-exempt government entity to offer property insurance to Florida homeowners who are unable to find coverage in the private market.
“I’m not sure we’ll ever be able to get back to what was the norm beforehand,” Ms. Murray said. “There’s going to be a new norm, and unfortunately everyone is going to have to adjust to it for now. For homebuyers, it’s essential that they determine their insurance costs before signing any contracts so that they’re not in for a big surprise later.”
In fact, the National Association of Realtors (NAR) recommends that all prospective homebuyers request a Comprehensive Loss Underwriting Exchange report to help them identify potential insurance liabilities in a home before making an offer.
Generated by consumer reporting agency LexisNexis, the report includes information on the date, type of loss, and amount paid to the policyholder for a claim. “Payouts due to water damage, foundation troubles and even mold may cause buyers to pause and reconsider the property,” NAR’s website states.
