Homeowners say coverage affordability is becoming more challenging
Most policyholders blame inflation and home prices for recent premium increases.
During 2023, 72% of home insurance policyholders saw premiums grow, according to a ValuePenguin.com survey, which also found that 34% of Americans are finding it more difficult to afford coverage.
Among homeowners surveyed, 34% said they had an increase of 5%-9.9%, while nearly one-quarter saw a 10%-29.99% increase in their home insurance costs. ValuePenguin reported that 3% of homeowners had premium increases of 30% or more. An additional 10% reported being uncertain of how much their premiums rose.
A majority of policyholders believe, and rightly so, that inflation, growing claims volume and labor shortages are among the major drivers of recent rate increases, ValuePenguin reported. Slightly more than half blamed rising home prices and one-quarter pointed to climate change as a cost-propelling force.
Looking into 2024, three-quarters of home policyholders are anticipating another rate increase and 26% are worried their homes will become uninsurable. ValuePenguin noted these fears are not unfounded, as nearly 20% of homeowners said they received a nonrenewal notice. However, 79% of those who received nonrenewal notices were able to secure coverage through negotiations with their current carrier or by switching providers.
Nearly 90% of homeowners said they haven’t updated or changed their home coverage in at least a year, while 49% had the same policy for more than five years.
Although most home policyholders haven’t moved to change their coverage, their carriers have. Some 37% of homeowners said their insurer changed their existing policy by raising deductibles, adding surcharges or dropping coverage.
While a majority of policyholders have not changed their policy in recent years, more than half (54%) said they did shop around for coverage to see if they could find a better rate. On average, those who shopped around and changed carriers saved $474 annually, ValuePenguin reported.
According to Divya Sangameshwar, insurance expert and spokesperson for ValuePenguin, placing too much focus on lowering insurance rates could distract from the larger issues that are also influencing rate increases. This, in turn, could lead to even higher rates and fewer insurers willing to underwrite home policies.
“For the average homeowner, this could mean fewer options with less coverage or being uninsurable,” Sangameshwar said in the report. “Any solution to fixing the rising homeowners insurance rates also needs to address the issues causing an increase in the volume and cost of claims — namely inflation, outdated building codes, building homes in high disaster risk areas and climate change.”
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