Home insurance prices continue to rise and could rise another 6% this year after rising nearly 20% over the past two years, according to one estimate. A combination of inflation and extreme weather events in some states is driving up prices, with annual growth averaging 19.8% between 2021 and 2023. Report from Insurify established.
The insurance comparison site estimates prices will rise 6% to an average of $2,522 by the end of 2024, and prices could rise further in 2025 if hurricane season is severe. NOAA predicts that this will be.
Where insurance costs grow the most
Insurance rates vary from region to region. Some factors vary from person to person, such as the size and age of the home, and claims history. Other impacts include where your home is lie in and how likely it is to be damaged.
Because of these different factors, not everyone will see their premiums increase this year. Countries that are more vulnerable to climate disasters such as floods and wildfires are more likely to see increased incidence. Other states, such as California, will see only slight increases due to National regulations limit interest rate increases in a given year.
Taking Louisiana as an example, it is expected that maximum rate increase Damaged due to hurricane. Meanwhile, rates in Maine are catching up, Increase Rising sea levels and subsequent flooding and coastal damage. Prices could rise in Florida, tooAlthough It already has some of the most expensive insurance in the country, with homeowners paying an average of $10,996 a year for coverage.
Here are the top 10 states where homeowners are bearing the brunt of increased insurance costs.
Why are insurance costs rising so much?
States with high insurance costs tend to be prone to extreme weather events. and As climate change intensifies, some predict these weather events will become more extreme in the futuree—wThis means homeowners in these prone areas may be affected Large premium.
According to a study real estate agent networknearly half of households in the United States are at risk from climate change. many coastal countries in the following areas According to statistics, the risk of natural disasters is relatively high FEMA’s Country Risk Index. at the same time, wildfire has become a growing risk in various fields area Across the country, the damage caused was estimated at US$394 billion to US$893 billion per year.
Inflation has caused the cost of building materials to skyrocket in recent years, and building maintenance costs have also increased. This means that when a homeowner files a claim, the insurance company has to pay more – which is a cost That is Passed on when they increase premium rates.
Even reinsurance (basically insurance companies), further raising prices, especially in disaster-prone areas like Florida. Some insurers (and reinsurers) have left areas they consider too risky. According to Insurify, quantity In 2023, there were 35% fewer homeowners insurance policies available.
As climate change intensifies, homes that are not located in areas with catastrophic weather can still experience significant damage from events such as large hail and severe thunderstorms. But according to a February 2024 study by Insurify, 60% of homeowners waived flood insurance, and standard insurance doesn’t cover flood costs.
What rising insurance costs mean for investors
As climate change becomes increasingly important, it will not only result in an increase in insurance premiums, but may Affects home value. According to Insurify, about 25% of homeowners believe climate change has affected the value of their homes. At the same time, a congressional report The study found that climate-intensified wildfires could reduce total real estate value by up to $337.5 billion annually.
“Climate risk is a big thing,” said Realtor.com economist Jiayi Xu. in a statement. “It affects home values, insurance costs and the overall stability of the housing market.”
even Houses that are not direct hit Affected by extreme weather events Insurance premiums will only increase due to rising insurance premiums Cost of owning a home.
It’s not just a single-family home Being hit. Insurance commercial real estate Danielle Lombardo, managing director of insurance provider WTW, said insurance costs have also soared, which could lead to a slowdown in transactions as unpredictable insurance costs could impact owners’ ability to underwrite transactions. Tell pear news.
In other words, as natural disasters increase, real estate investors who own properties will need to pay closer attention to climate and its potential impact on insurance prices. But the overall price of doing business.
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