Home Insurance 2024: Possibly Pay Up To 35% More in Florida, California and 2 Other States
It’s well-known and accepted that it is getting harder to find home insurance for houses in the Sunbelt and across California due to an increased risk of natural disasters, including hurricanes, floods and wildfires. When you can find insurance in these regions, it often costs more.
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“I’ve seen policies for high-value homes rise 600% or more,” said Robb Lanham of HUB Private Client, which provides home insurance, umbrella policies and other insurance products to high-net-worth homeowners. Lanham cited one homeowner whose premium went from $12,000 to $72,000 on his south Florida home.
But it’s not just states like Florida, California and Louisiana that are experiencing rising insurance rates. According to a report from HUB Private Client, property insurance rates are likely to rise 25% to 35% across the board this year.
Additionally, homeowners might see more exclusions in their policies and fewer insurers willing to offer full coverage for high-value homes.
Bad Weather Happens All Over the Country
When you think about insurance risks in Florida, hurricanes probably come to mind. Wildfires and earthquakes make you think of California. But these events are by no means exclusive to these states.
“The large majority of the over-$1-billion weather events were not in California. Cold weather is moving south. Houses in Texas weren’t built to withstand freezing temperatures,” Lanham said. “Bad weather is happening all over the place.”
Winter storms, including the bomb cyclone that hit the Great Lakes region, cost insurers almost $6 billion last year, according to the HUB report. Convective storms account for roughly $17 billion in insured losses, with hail damage accounting for more than $11 billion of that.
Texas and Colorado have already seen rate increases due to an increase in severe weather events, said Leslie Kasperowicz, managing editor of Insurance.com.
“Texas has seen big rate increases as winter weather becomes a bigger risk. While the coast has always been a hurricane risk, we’re now seeing other weather causing huge losses in the state,” said Kasperowicz, adding that “Colorado is typically not a state we think about in terms of severe weather, but rates are increasing there as the wildfire risk grows.”
HUB research showed that the following states, previously considered less susceptible to natural disasters, might face rising insurance rates due to increasing weather-related incidents.
Minnesota
Missouri
Indiana
South Dakota
Other Reasons for Rising Home Insurance Premiums
It’s not just wildfires and weather-related claims leading to rising premiums.
“Weather is only one component in insurance rates,” Lanham explained in an interview with GOBankingRates.
Inflation is another huge factor in rising insurance premiums. The price of high-end appliances rose 5% to 16% between 2021 and 2022, according to the Chubb Market Trends 2023 report. The cost of building materials rose by 4% for copper electrical up to an increase of 35% for plumbing materials. Per the Chubb report, labor costs have also risen for some construction occupations.
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Both Kasperowicz and Lanham cited litigation as another cause of increased premiums.
“In Florida, the high rate of litigation against insurance companies has had a big impact on insurance rates in the state,” said Kasperowicz.
Ultimately, Kasperowicz explained, “Insurance companies need to take in more in premiums than they pay out in losses to stay in the black, and as the losses mount in areas where billion-dollar disasters happen annually and the cost of claims goes up, insurance companies need to increase premiums across the board to cover the losses.”
How To Reduce Your Home Insurance Costs: Expert Advice
There are steps you can take to reduce the cost of your policy or even find a policy for a home in a hard-to-insure region. Lanham called this “dressing up the risk,” meaning taking steps to make your home more attractive to insurance companies.
Kasperowicz agreed.
“Keeping your home well-maintained makes it more insurable. Insurance companies want to see that you are invested in safeguarding your property and preventing claims,” she said.
Here are some practical steps you can take to make your home more insurable and potentially reduce your premiums, based on advice from our experts.
Focus On Landscaping
Where there are large, older trees on the property, there is a risk of home damage if the trees fall during a storm. Likewise, there is an increased risk of wildfires spreading. Spending some time tailoring your landscape to create a safer environment can pay off.
“In California, eliminate juniper trees and wooden mulch,” said Lanham.
“In wildfire areas, clear brush around your home, and change out flammable materials such as wood decks for fire-resistant materials,” Kasperowicz added.
Upgrade Your Roof
“An upgraded roof is a good investment just about anywhere,” said Kasperowicz. “The right roof can reduce wind and hail damage, prevent leaks during major storms and, in a wildfire-prone area, make your home less likely to catch fire.”
Lanham recommended a “double-strapped roof,” which adds horizontal and vertical supports to an existing roof.
Be Prepared For Storms
Consider installing impact-resistant windows and doors, hurricane shutters and flood vents in any area prone to hurricanes, tornados, hail or high winds.
If you have enough warning, consider moving high-value items out of harm’s way before a storm, Lanham recommended. For instance, high-net-worth individuals might own fine art or other collections that they can transport to a second home, storage facility or even a friend’s house if they know a storm is coming.
Even if you don’t have collections worth millions of dollars, you might consider storing your valuables in a safer location. Not only can it help avoid an insurance claim, but you may save precious family mementos such as old photographs from damage.
If you think you might be evacuated from your home, try to board up the windows and remove treasured or expensive items — but only if you have enough time to do so safely before the storm.
Invest In a Back-Up, Whole Home Generator
A whole-home generator can help prevent a plethora of problems, from spoiled food in the freezer and refrigerator to burst pipes caused by freezing if the heat turns off. “You need to invest in a gasoline-powered backup generator that can run the house,” said Lanham.
However, only run the generator outdoors, at least 20 feet from doors and windows. It’s also a good idea to install battery-back-up carbon monoxide detectors in your home’s sleeping areas as an additional safety measure.
Bottom Line
Home insurance rates are rising, but there are ways you can protect yourself from substantial increases. “So much of our time in this industry is spending time ‘left of loss,'” Lanham said, explaining that he coined the phrase to describe actions that can help prevent claims. “Look for ways to prevent loss,” he said.
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This article originally appeared on GOBankingRates.com: Home Insurance 2024: Possibly Pay Up To 35% More in Florida, California and 2 Other States
