Home insurance premiums in Indiana have seen a significant increase, leading to a rise in policy cancellations due to nonpayment, according to a report by the Fair Housing Center of Central Indiana. The report highlights that the average home insurance premium in the state rose by 16% between 2021 and 2024, amounting to an increase of $412.
The Indianapolis metropolitan area experienced a similar surge, with a 16.5% increase, or $440, during the same period. This trend is attributed to various factors, including the rising cost of replacing homes and the increased risk of natural disasters. The report cites a study by the Consumer Federation of America, which used ‘test quotes’ for a typical home with a replacement value of $350,000 to estimate premium increases.
The data suggests that insurance premiums vary widely based on several factors, including credit score and property value. Despite the estimates being conservative, as they don’t account for increases in property value, the average Indiana home insurance premium was estimated to be $2,567 in 2021, higher than other estimates. The National Association of Insurance Commissioners calculated an average policy cost of $1,058, while data from the U.S. Treasury Department’s Federal Insurance Office revealed an estimate of $1,464 for HO-3 and HO-5 policies.
The consequences of rising premiums are evident in the increasing number of policy cancellations. In 2022, 1 in every 54 policies, or 1.8%, was canceled due to nonpayment. Certain counties, such as Fayette, Blackford, Vermillion, and Sullivan, saw rates at least twice as high. One ZIP code in Jennings County recorded a staggering 16.7% cancellation rate. Additionally, 1.2% of policies statewide weren’t renewed by insurers in 2022, with six counties experiencing rates of 2% or higher.
The report suggests that nonrenewal typically occurs when insurers perceive a home or homeowner as becoming too risky to cover. This can be due to aging homes requiring costly repairs, increased risk of natural disasters, or the use of aerial photography for risk assessments. The Fair Housing Center of Central Indiana is calling for greater transparency in the insurance industry, highlighting the need for more comprehensive data to understand these trends.
