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A surge in premiums

According to a report by Insurify, a Massachusetts-based insurance marketplace, the average annual premium for homeowners insurance is estimated to reach $1,784 in 2023, marking a 9% increase from 2022 when the average premium was $1,636. This expected surge in home insurance premiums in 2023 is on top of a 7% increase in 2022. Average premiums this year are expected to be more than $250 higher than in 2021.

Inflation is one of the main factors driving up the cost of home insurance. Colleen Finn, a managing director at the Boston-based insurer Plymouth Rock, explained, “The same inflationary pressures that are driving up your grocery bill are now driving up your homeowner insurance rates. It is costing more and taking longer to repair your home, increasing the average cost per claim and ultimately the cost of homeowners insurance for everyone.”

However, experts say that more catastrophic weather and natural disasters due to climate change are also driving home insurance premiums higher. Insurers are facing an influx of water- and fire-damage claims in particular. Certain areas are more prone to severe weather, and FEMA assigns “risk ratings” based on the likelihood of natural disasters.

The balancing act

On average, home insurance premiums for properties located in areas with a very high risk rating are $3,379, whereas premiums for homes in low risk areas run $1,387, according to Insurify’s estimates. Regardless of whether your home is located in a high-risk zone, your home insurance premiums can be affected by natural disasters in other areas as insurers may operate across multiple states, hiking premiums in one area to offset the costs of another.

In addition, some states are more expensive than others. Insurify found that the 10 most expensive states have average home insurance premiums above $4,000. These states include Nebraska, Texas, Colorado, South Dakota, Kentucky, Kansas, Alabama, Louisiana, Oklahoma, and Florida.

Florida has the highest home insurance premiums in the nation, with an average premium of $7,788. This is 437% higher than the estimated 2023 national average. According to Insurify, Florida’s average last year was $4,692. This year’s projection represents a massive 66% cost increase for homeowners in the Sunshine State.

Florida is grappling with a home insurance crisis caused by rampant “fraud and legal system abuse,” with the state accounting for 80% of the nation’s home insurance lawsuits, according to the nonprofit Insurance Information Institute (III). Several insurers went insolvent last year, III says, and dozens more either left Florida or stopped offering new policies in the state.

And we are experiencing a similar exodus of insurers here in CA.  According to the WSJ; In 2016 State Farm General Insurance, which provides fire insurance to 20% of the state’s homeowners, proposed raising rates by 6.9%. The insurance commissioner at the time, Democrat Dave Jones, instead ordered the company to slash rates by 7% and rebate consumers $100 million. Small wonder that insurers avoid this process and instead quietly pull back from the market.”

So reach out to your representative and tell them we need real solutions!