Home insurance rates in the U.S. have been getting higher, with nearly 35% of Americans finding it tough to cover their premiums in the current year!

A recent survey from ValuePenguin – a website that compares insurance, mortgages, and other financial products – revealed some concerning trends in home insurance and its rates across the U.S. According to it, over a third (34%) of Americans are struggling to pay their home insurance premiums, while a quarter (26%) worry that they might not be able to insure their homes in the future.

Over 2,000 Americans, aged 18 to 78, were surveyed. Among them, nearly 20% claimed thet’ve had already received notices that their insurance policies wouldn’t be renewed. Due to that, 8% of these people chose to go without insurance this year.

According to Divya Sangameshwar, Insurance Expert for ValuePenguin, there are “many factors why insurance firms may opt not to renew a home’s coverage”, which inclues inflation, home prices increase, higher numbers of filed claims, climate change, and more risks.

National Average Cost of Homeowners Insurance

The average yearly cost of homeowners insurance nationwide is $1,516, but this varies significantly by state. For example, Colorado currently has the highest average rate at $2,900 per year, largely due to wildfires and hailstorms causing substantial damage, meanwhile states like Wisconsin, Delaware, New Hampshire, Pennsylvania, and Vermont have the lowest average annual rates, with Vermont being the lowest at $680. Other states with high premiums include Nebraska, Texas, Oklahoma, and Kansas.

“The wildfires and hailstorms in Colorado caused billions of dollars in damages, which has led to significantly higher premiums. If you live near the coast, there’s been unprecedented rate hikes due to storms and flooding”, Ms. Sangameshwar explained.

Factors like the age and size of the home, as well as the level of coverage, also influence costs. In the Western U.S., wildfires contribute to rising insurance rates. In addition to that, Sangameshwar predicts that prices will continue to rise, especially in coastal areas due to increased risks from storms and flooding, until comprehensive solutions are implemented, such as updating building codes or restricting construction in these high-risk areas.

JoAnne Murray, president of Allan Block Insurance in Tarrytown – New York, agress and points out that premiums skyrocketed due to wind damage from hurricanes and tornadoes. As and example, she shares that a Florida client’s premium was quoted at $340,000 a year for their $7 million coastal home, which is up from $26,000.

Apart from that, inflation has also increased construction materials prices, further driving up expenses, once rebuilding or repairing homes will take longer and cost a lot more, “that means people have to stay in hotels or rent longer”, says Ms. Murray. The survey sheds a light on these increase on rates, as 37% answered that they saw their insurance costs rise by 5-10% this year, while 24% experienced rate hikes of 11-30%.

How To Lower These Rates

“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. “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 non-renewals more manageable”, Ms. Sangameshwar says.

Homebuyers should reconsider certain amenities, like pools, which can increase insurance costs substantially. Dropping coverage is risky, as it can lead to financial disaster and even higher premiums later. Instead, homeowners should use the notice period to review options and negotiate new policies. The survey shows that 87% have not updated or changed their current home insurance policy in over a year, and 49% for more than 5 years.

As insurance costs continue to climb, over half of respondents (50%) now believe government intervention is necessary. Some suggest models like Florida’s Citizens Property Insurance Corporation, which offers coverage to those unable to find it in the private market.

“I’m not sure we’ll ever be able to get back to what was the norm beforehand. 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”, added Ms. Murray.

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