Homeowners insurance is becoming more expensive and, in many places, more difficult to find. There’s no sign that the situation is going to get better any time soon.
The culprits: climate change, rising costs to rebuild or make repairs and a sharp increase in the premiums from reinsurance companies that are used by insurers to limit their risks.
Climate change isn’t the only factor. Insurance companies also point to the rising cost of replacing homes, as inflation for building supplies and labor has soared. The companies also blame limits placed on insurance premiums in some states, including California. The increased frequency of natural disasters is a major factor driving insurers to pull out of some markets and for reinsurers to raise their rates, which affects the premiums everyone pays, according to the experts.Insurance premiums nationwide aren’t up significantly – only 1.6% in the last 12 months according to the Consumer Price Index, the government’s main inflation measure. But double-digit rate increases are common in areas where insurance is becoming tougher to find.
There are different factors at play in all three states, but similar outcomes are happening: More people are being driven to the state-supported insurer of last resort, where they typically have to pay more money for a narrower policy. While Allstate and State Farm have declined to write new policies, smaller insurers in states like Louisiana and Florida have gone bankrupt – driving people out of their insurance altogether.
“A lot of states can learn a lesson from Florida,” he said. “Insurers don’t have to write policies in all 50 states. They are going to write policies where they think they can get a return on the capital.”
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