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Unraveling the Mystery: Why Did My Homeowners Insurance Increase in 2023?

As homeowners, we’ve all experienced that moment of confusion and frustration when we receive our insurance renewal notice, only to find out that our rates have increased. In 2023, this scenario was more common than ever, with homeowners across the country facing significant spikes in their insurance premiums. Let’s delve into the reasons behind this surge and explore what you can do to navigate these challenging times.

Understanding the Surge in Home Insurance Rates:

 

  1. **Inflation and Construction Costs:**

In 2023, one major factor contributing to the rise in homeowners’ insurance rates was the surge in labor and construction costs. Inflation and expensive natural disasters played pivotal roles in driving up these costs. Consequently, homeowners saw an average increase of 21% in their insurance premiums, with an average hike of $244.

  1. **Forecast for 2024:**

Looking ahead to 2024, the trend is expected to continue. Severe weather conditions, such as wildfires, hurricanes, and flooding, have led insurance companies to raise premiums and become more selective in their coverage offerings. Big names in the industry, like State Farm, Allstate, Nationwide, and Farmers, are either withdrawing from states or reducing exposure in high-risk areas.

 

  1. **Factors Behind Rising Premiums:**

Several factors are contributing to the surge in home insurance premiums:

– Continued inflation in 2024

– More extreme natural disasters

– Aging homes in need of upgrades

– Decreased insurance scores

– Liability risks associated with attractive nuisances like pools and trampolines

What Can You Do?

 

If you’ve noticed an increase in your coverage amounts or higher rates on your insurance policy, here are steps you can take:

 

  1. **Contact Your Insurance Agent:**

Reach out to your insurance agent to understand the changes in your policy. They can provide reasons for the increase and suggest practical ways to lower your rates, such as adjusting your deductible or exploring discounts.

 

  1. **Three Ways to Lower Your Homeowners Insurance Rates:**

– **Ask about Discounts:**

Inquire about available discounts, such as multi-policy, claim-free, protective devices, first-time homebuyer, senior citizen, and loyalty discounts.

– **Switch to a Higher Deductible:**

Consider opting for a higher deductible, as this can lead to lower premiums. Evaluate your risk factors and choose a deductible that aligns with your needs.

– **Re-shop Your Homeowners Insurance:**

Regularly review and compare your home insurance options to ensure you’re getting the best coverage and rates. Platforms like Policygenius make this process easy and free.

 

At a recent affordable housing symposium in Washington, D.C., housing experts shed light on the growing challenge of soaring home insurance premiums affecting homeownership across America. The surge in premiums, outpacing property value increases, is becoming a major hurdle for potential homebuyers.

 

Michael Butchko, VP of Business Intelligence at Neighborworks America, shared insights from Policygenius, revealing a nationwide average annual increase of 21% in home insurance premiums. This translates to a substantial $244 hike, with some areas experiencing premiums spiking up to 50%.

The affordability crisis is pushing some potential buyers out of the market and forcing existing homeowners to sell. Large insurance providers are even canceling policies and withdrawing from disaster-prone regions, leaving homeowners in a precarious situation. Some are opting to pay off mortgages early to sidestep mandatory insurance requirements.

 

Experts like Thom Amdur from Lincoln Avenue Communities emphasized that the rising insurance costs are not just a homeowner’s problem but also impact developers, potentially leading to fewer affordable housing projects. Factors such as climate events, construction costs, inflation, and reduced competition in the insurance marketplace contribute to the upward pressure on premiums.

 

Assessing Future Risks with Technology

 

Peter Carroll, Head of Public Policy at CoreLogic, highlighted the role of technology in identifying areas at high risk of various disasters. Advanced data models can project risks 15 to 30 years into the future using different climate change scenarios. Amdur mentioned that starting next year, Lincoln Avenue Communities plans to use data to create a scorecard for each project, incorporating climate and other risks to design upfront mitigation strategies.

Consumers are increasingly concerned about climate risks impacting housing, but affordability challenges often force them to choose high-risk areas. Nicole Bachaud from Zillow stressed the importance of data transparency, providing information on risks, and educating consumers on actionable steps to mitigate climate risks for resilient housing choices.

 

Strengthening Housing Stock for Long-term Solutions

 

Panelists proposed various solutions, including mandatory flood insurance, government backstops, increased funding, and tax credits to enhance community resilience to climate change. They emphasized the need for stronger building codes correlated with lower mortgage delinquencies post-disaster, according to CoreLogic data.

 

While acknowledging the challenges, Amdur encouraged a mindset shift, suggesting that resilience can be built into high-risk areas with upfront knowledge of the risks. This could involve innovative designs, such as raising mechanical systems, installing flood barriers, and following updated landscaping guidelines.

 

Bachaud urged a strategic approach to future housing developments, using climate as a lens to focus on areas with less risk, creating “climate havens.” The goal is to address the future housing supply strategically and mitigate climate risks effectively.

 

In the ever-changing landscape of the insurance market, understanding why your homeowners insurance increased in 2023 is the first step towards taking control of your policy. To navigate these uncertainties and explore personalized solutions for your situation, consider reaching out to our asset management experts. We’re here to assist you in deciphering the market trends, answering your questions, and ensuring that you have the coverage you need. Contact us today to make informed decisions and secure your home with confidence in these challenging times.

Cogo Realty (208) 991-1493

info@cogoreaty.com

www.CogoRealty.com

 

#HomeownersInsurance #InsuranceRateHikes #PropertyInsurance #AffordableHousing #ClimateResilience #HousingMarketChallenges