{"id":170276,"date":"2024-04-05T14:55:18","date_gmt":"2024-04-05T20:55:18","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=170276"},"modified":"2024-06-27T11:26:12","modified_gmt":"2024-06-27T17:26:12","slug":"insurance-premiums-to-reach-record-highs-in-2024","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/insurance-premiums-to-reach-record-highs-in-2024","title":{"rendered":"Home Insurance Premiums Are Set to Hit a Record This Year\u2014When Will Prices Fall?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC8295992978\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Insurance premiums are skyrocketing across the U.S., with no end in sight to annual increases that may just make you rethink investing in real estate in several parts of the country. At the very least, anyone investing in 2024 needs to be aware of the states where insurance premiums are rising the fastest\u2014and factor these changes into their costs.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">According to a recent&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/insurify.com\/homeowners-insurance\/report\/home-insurance-price-projections\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">report<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;by the insurance comparison platform Insurify, home insurance premiums are set to rise by 6% in 2024 after already jumping by 20% over the past two years. And that\u2019s just the average. Many states will see double-digit premium increases this year thanks to a perfect storm (excuse the pun) of factors, most notably extreme weather events and high home repair costs.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Let\u2019s take a deeper dive into these factors\u2014and which states are affected the most.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Impact of Extreme Weather Events<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">It\u2019s clear that the sheer volume of extreme weather events affecting the U.S. is rising at an alarming rate. In the 1980s,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.ncei.noaa.gov\/access\/billions\/summary-stats\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">the U.S. had three storms that caused $1 billion<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in damage each year. Fast-forward to the 2010s, and that number was 13 per year. In 2023, the U.S. experienced 28 such weather events in a single year.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Obviously, no one is surprised by hurricanes in Florida\u2014but home insurers are increasingly wary of working in the state because of the frequency and intensity of such events. Home insurance premiums already are the highest in the country in the Sunshine State, with an average of $10,996 in 2023, according to Insurify data. And they are due to rise again by 7% this year, bringing the cost of insuring a typical Florida home to $11,759.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Other states vulnerable to hurricanes are also seeing huge premium hikes. Louisiana\u2019s insurance premiums are set to rise a huge 23%, bringing the average annual home insurance cost in the state to $7,809. South Carolina and North Carolina are projected to see significant premium increases, too, of 11% and 10%, respectively.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These increases, while hugely problematic for homeowners in these areas, are somewhat expected, at least from a geographical standpoint. What will come as a (nasty) surprise to some investors are the projected double-digit increases in states that haven\u2019t traditionally been associated with extreme weather.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Coastal storm damage risk is now impacting insurance premiums in Maine, which traditionally was seen as a lower risk. The Maine Climate Council&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.maine.gov\/future\/sites\/maine.gov.future\/files\/2021-05\/GOPIF_SLR_Factsheet_2021_05_06.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">projects a 1.5-foot relative sea level rise (SLR)<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;by 2050. Connecticut is another state that traditionally hasn\u2019t been seen as high risk but is now&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/portal.ct.gov\/dph\/environmental-health\/climate-and-health#:~:text=Summer%20droughts%20are%20expected%20to,stronger%20winds%20and%20more%20precipitation.\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">identified<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;as being vulnerable to hurricanes, coastal storms, and sea level rises.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Even more unexpectedly, the Midwest is increasingly suffering from huge home insurance premium hikes. Michigan and Illinois will see premium increases of 14% and 10%, respectively. Why? Wind and hail.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">July 2023 was a particularly devastating month for the Midwest, with two billion-dollar storms pummeling states from Nebraska to Michigan within a week of each other. \u201cPing-pong to golf ball-sized hail and high winds damaged many homes, vehicles, businesses, and other infrastructure,\u201d according to the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.ncei.noaa.gov\/access\/billions\/events\/US\/2023?disasters[]=all-disasters\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">National Oceanic and Atmospheric Administration<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;(NOAA).&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Home insurance typically covers wind and hail damage; it\u2019s no wonder insurers are raising premiums in states experiencing property damage from golf ball-sized hail.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These extreme weather events perhaps aren\u2019t quite as dramatic as hurricanes, and, as Tim Zawacki, principal research analyst for insurance at S&amp;P Global Market Intelligence,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.npr.org\/2024\/03\/03\/1233963377\/auto-home-insurance-premiums-costs-natural-disasters-inflation\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">told NPR<\/span><\/a><span data-preserver-spaces=\"true\">, \u201ca lot of these storms don&#8217;t make national headlines.\u201d However, they do have an enormous impact \u201cat the local level,\u201d and \u201cthe breadth of where these storms are occurring is something that [&#8230;] the industry is quite concerned about.\u201d<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Beyond Climate Change: The Ongoing Building Supply and Labor Cost Crisis<\/span><\/h2>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-819\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Home insurance premiums<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;are directly affected by home construction prices. This is the other factor that has been wreaking havoc on home insurance costs since the pandemic.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Infamously, the cost of just about every building material skyrocketed beginning in 2020, from lumber to construction steel and fiberglass, to say nothing of a labor shortage that continues to this day. Overall, construction costs are still rising, with a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.globest.com\/2024\/02\/21\/construction-costs-expected-to-increase-as-much-as-6-this-year\/?slreturn=20240303134147\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">recent report<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;projecting 3% to 6% increases across the country in 2024.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">These cost increases contribute to insurance premium rises\u2014but that\u2019s not the whole story. The high cost of certain materials is reshaping what insurers are prepared to cover in the first place.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">In high-risk areas, property owners are beginning to see specific structural features or materials in their homes excluded from home insurance policies because of the high rates at which they\u2019re claimed for. This is the case for aluminum and knob-and-tube wiring. Many insurers have begun excluding this type of wiring from their policies as a form of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.insurancebusinessmag.com\/us\/news\/breaking-news\/the-implications-of-rising-construction-costs-on-property-insurance-480252.aspx\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">risk mitigation<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Aluminum used to be four to five times cheaper than copper and, therefore, was a popular cost-cutting wiring material. It\u2019s also much less flexible and more fragile than copper. However, take a guess at what happens to aluminum wire in a storm.&nbsp; &nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Future: Can The Home Insurance Crisis Be Fixed?&nbsp;<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Some insurers are cutting their losses and stopping coverage in high-risk areas. Florida has it the worst: Farmers Insurance, Bankers Insurance, and Lexington Insurance all pulled out of the state last year.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">It is worth pointing out that Florida\u2019s home insurance crisis is complex, perhaps more so than in other states. On the one hand, is the state\u2019s problem with the scarcity of reinsurance: Reinsurance providers are pulling out of the state, too, leaving home insurance providers with no recourse if they can\u2019t cover their costs.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Then there\u2019s the issue of fraudulent claims. In fact, the problem is so widespread in the Sunshine State that it\u2019s being&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bankrate.com\/insurance\/homeowners-insurance\/florida-homeowners-insurance-crisis\/#canceled\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">tackled at the state legislative level<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-895\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">All these problems<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;exist in other states, too. They\u2019re just exacerbated in high-risk areas where the costs are increasingly insurmountable for everyone involved. If the trend continues, \u201cit\u2019s possible that the highest-risk areas will become uninsurable,\u201d according to Betsy Stella, vice president of carrier management and operations at Insurify. \u201cHowever, where there\u2019s demand, typically a supplier will appear. The question will be, at what cost?\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The answer is that making home insurance affordable again may involve restructuring it. One solution to the current crisis could involve creating state-run insurance providers focusing on specific&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/safest-and-least-safe-real-estate-markets-from-natural-disasters\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">natural disasters<\/span><\/a><span data-preserver-spaces=\"true\">, following the FEMA flood insurance model. Florida is already considering establishing a state-run insurance program for hurricane claims.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">To be more precise, some Florida policymakers are&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.tampabay.com\/news\/florida-politics\/2024\/02\/06\/florida-property-home-insurance-crisis-hurricane-premiums-ian-citizens\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">proposing<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;to repurpose its state-run insurance provider, Citizens Property Insurance, into a hurricane-only provider for all Florida residents. Currently, Citizens is a \u201clast-resort\u201d insurer but is increasingly becoming the default provider for residents who can\u2019t get any other insurance. Citizens is not enthusiastic about the proposed changes, arguing that it would make getting reinsurance harder.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The other set of proposals center on making it possible to insure only the remaining balance on a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mortgage<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;rather than the replacement value of a home. This could make insurance more affordable but could put homeowners in a difficult position if the amount they needed to claim exceeded their remaining mortgage balance.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Ultimately, it\u2019s difficult to tell whether 2024 will bring about reforms to home insurance markets in high-risk areas. Legislative changes happen slowly. We\u2019ll just have to wait and see what solutions will be implemented\u2014and when.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">In the meantime, it may be wise to hold off investing in an area with known home insurance problems.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_13186191f0864b3ab3086e7bcb275bc8\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_f8f2bc208651f685287b13665bf177e6\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_5c46ab040b27bcb54257d7b47d924f87 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/agent\/match\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Agent Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/insurance-premiums-to-reach-record-highs-in-2024&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/insurance-premiums-to-reach-record-highs-in-2024&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Insurance premiums are skyrocketing across the U.S., with no end in sight to annual increases that may just make you rethink investing in real estate in several parts of the country.<\/p>\n","protected":false},"author":613618,"featured_media":170278,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8,7119],"tags":[],"class_list":["post-170276","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/170276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613618"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=170276"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/170276\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/170278"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=170276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=170276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=170276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}