Home insurance rates are expected to continue rising significantly, driven by three main factors: climate change, housing development in disaster-prone areas, and inflation. According to a report by the Wall Street Journal, home insurance rates increased by an average of 11.3% in 2023, with some states experiencing rate increases of over 20%.
Climate change is a primary driver of increasing home insurance prices. Rising temperatures have led to more frequent and severe weather events such as wildfires, hail storms, and hurricanes. In north Texas’s Colin County, 12 hail storms have battered residents’ homes this year, causing an estimated $400 million in damage.
Hail, water damage, and wind from storms and hurricanes are major contributors to insured losses, with hail driving up to 80% of these losses. Climate change is also forcing insurers to reassess their risk assessment models, making it harder for them to predict and prepare for future events.
Building homes in disaster-prone areas is the largest individual driver of spiking home insurance rates. Insurers are increasingly concerned about the long-term consequences of building homes in regions prone to severe weather conditions. According to Neil Alldredge, chief executive of the National Association of Mutual Insurance Companies, “We’re just putting more things to break where the weather is.”
Inflation is also a major factor driving up home insurance rates. The cost of maintenance and repairs increases as inflation rises, forcing insurers to adjust their pricing accordingly. Experts recommend that homeowners consider bundling their policies, shopping around for new quotes, and investing in weatherproofing measures such as storm-resistant windows and landscaping.
Homeowners are being urged to take proactive steps to mitigate the impact of rising home insurance rates. By taking control of their home maintenance and repairs, and exploring ways to reduce their risk exposure, homeowners can potentially lower their premiums and stay ahead of the curve.
Source: https://www.independent.co.uk/news/world/americas/home-insurance-bills-spike-arizona-texas-utah-b2664938.html