Increasingly frequent and extreme weather events, along with rising home repair costs, are combining to drive homeowner's insurance premiums higher.
According to the Insurance Information Institute, 2020 saw the number of wildfires nationwide jump to 58,950 from 50,477 in the year prior, resulting in over 10.1 million acres burned, more than double the 2019 number.
Many of these fires resulted from lightning strikes; the average cost of a lightning-caused homeowner's insurance claim soared 141% between 2019 and 2020.
Hurricanes are also becoming more frequent and severe. A record number of named storms (30) occurred in 2020, eclipsing the previous mark of 28 set in the Katrina year of 2005. In 2020, 14 storms grew to hurricane strength, with Hurricane Laura alone generating more than 111,000 insurance claims costing $8.3 billion.
Homeowners in areas with above-average exposure to wildfire and hurricane activity are seeing large premium increases as insurers anticipate more volatile years ahead.
Higher repair costs
Adding to the effects of natural disasters are rising repair costs.
The price of lumber doubled in a four-month period from late 2020 to early 2021, with iron and steel prices rising at slower rates. These price increases alone would have pushed up repair costs, but there has also been increased demand for contractors to make repairs.
Unfortunately, COVID-19 pandemic fears kept workers off of job sites last year, and it became harder to find contractors to repair floors and walls following plumbing leaks and similar events.
Also, low mortgage rates have contributed to rising demand for new homes, so contractors who might have been available for repair jobs are instead taking more lucrative home construction projects.
Consequently, repair costs are going up. Throw in more frequent and severe wildfires and storms, and the result can be higher insurance premiums.
What you can do
There are things homeowners can do to combat rising premiums:
Work with a professional independent insurance agent like us - We represent multiple insurance companies and know which ones offer lower rates and high-quality claim service.
Consider increasing your policy's deductible - Do this if you think you can afford it. The insurance company subtracts the deductible amount from the loss before calculating the amount it owes.
Because higher deductibles mean that insurers pay for fewer small losses, policies with higher deductibles cost less.
Take steps to protect your home - In hurricane-vulnerable areas, install storm shutters and shatterproof glass, and reinforce the roof. Trim weak branches or cut down unhealthy trees that could fall on the house during a storm. You can find more tips here.
In wildfire areas, clear combustible vegetation from areas up to at least 30 feet from the home, remove debris from roofs and gutters, and install non-combustible roofs. Ready.gov has a number of other recommendations.
Your home may be at risk of other disasters in other parts of the country, like hailstorms and tornadoes. You can find a good list for tornado preparedness here. And this site has a handy page for hailstorm preparedness.
The cost of home damage losses is rising, but you don't have to swallow increased premiums. You can soften the blow by taking these and other steps.
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Dubuque, IA 52001
Phone: (563) 556-0272
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In February 2020, The Friedman Group joined AssuredPartners, the 11th largest insurance brokerage in the U.S. This partnership provides us access to additional capital and a national footprint that enables us to continue to negotiate the most favorable coverage terms and conditions for our clients, and allows us to provide an even broader spectrum of risk management support services.