The Rising Cost of Homeowners Insurance
Across the United States and around the world, natural disasters are becoming more frequent and severe. During such times, homeowners insurance is more crucial than ever. However, holding onto affordable insurance is becoming increasingly challenging. A recent report from NerdWallet revealed that homeowners insurance is getting more expensive nationwide, as reported by Scripps News.
NerdWallet’s survey showed that 54% of American homeowners experienced premium increases in the past year. Of those, 32% cited extreme weather events as the cause. According to Holden Lewis, NerdWallet’s home and mortgage expert, “You have more wildfires and dry areas, and you’re having more wind damage, hail damage, and flooding in other parts of the country. That’s why premiums have really accelerated a lot.”
Lewis also pointed out the growing number of homes as a contributing factor. “If you’re insuring 100,000 houses and then a whole bunch of houses are built, the next year you’re insuring 110,000 houses. That means you have 10% more exposure if you are an insurance company.”
The insurance industry is also shifting from historical data to predictive data to set premiums, further increasing costs. As Lewis noted, “The industry is switching from looking at historical data to set their premiums to predictive data. That’s another element that is increasing insurance premiums.”
The rising costs are particularly concerning for those in areas hardest hit by natural disasters, as many are being priced out of insurance. This can have far-reaching consequences, including making it difficult to buy or sell homes or living with unacceptable risk.
The root cause of these issues is the increasing global temperature, leading to a less stable climate. As the Earth warms, storms intensify, droughts and floods become more likely, and wildfires spread. Human-caused pollution is driving this temperature increase.
To mitigate rising insurance costs, experts recommend shopping around for insurance deals every few years and working with independent agents. Homeowners can also take steps to protect their properties, potentially lowering premiums. Lewis suggested, “Another thing, frankly, is to move… and I think that some retirees actually might consider this.”
While the situation seems dire, there are actions individuals can take. By understanding the factors driving insurance costs and taking proactive steps, homeowners can better navigate this challenging landscape.
