Mark Friedlander, a spokesperson for the Insurance Information Institute, a trade group, said home insurance premiums had cumulatively risen 32% from 2019 to 2023, while rebuilding and replacement costs had gone up 55%. Analysts for the group estimated that in 2023, home insurers experienced their biggest underwriting loss — the difference between collected premiums and paid-out claims — since 2011. Behind the loss were huge storms that caused more than $50 billion in damage that insurers had to pay for.
A survey last year by the institute and researchers for Munich Re, a reinsurer, found that 88% of U.S. homeowners had property insurance, down from 95% in 2019. Only 4% had flood insurance, even though 90% of the country’s natural disasters involve flooding.
Once insurers raise premiums, many homeowners are discovering that their lenders are willing to explore ways to make their payments more affordable. Banks that collect mortgage payments must ensure that borrowers’ coverage meets requirements set by the government-backed Fannie Mae and Freddie Mac housing agencies, but are open to owners tweaking it within those requirements, said Pete Mills, the chief economist at the Mortgage Bankers Association, the trade group for the mortgage industry.
Amy Bach, the executive director of United Policyholders, a nonprofit advocacy group that helps insurance consumers navigate tricky claims processes, said she found herself recommending a multitude of strategies these days to keep policies affordable.
“For most consumers, what they’re facing now is: What is the least worst option for me, given the pricing?” she said. She advises lowering the coverage on the contents of a house or cutting coverage for outbuildings like garages, sheds, pools or retaining walls.
“We had been saying, ‘Raise your deductible,’ but now, what does that mean?” Bach said. “My parents’ home on Long Island has a $33,000 wind deductible,” meaning they would have to pay that much out of pocket — a huge share of the cost of a new roof — before getting any help from their insurer.
And before you tell me that it isn’t Bidenomics, it absolutely is. The key number is, “rebuilding and replacement costs had gone up 55%.” Some of that is due to the demand for new housing and remodeling while corporations restrict supply by purchasing homes, but a huge contributor is the inflationary economy and high interest rates that are pervasive elements of the Biden economy. Yes, if it costs 55% more to replace your home whose value is already inflated, insurance rates are going to go way up.