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Homeowners insurance rates on the rise, mainly due to increase in natural disasters

Published  January 3, 2024 1:40pm EST
Personal Finance
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Due to climate change, many homeowners have seen their insurance rates creep up. (iStock)

The homeowners insurance industry is facing its third consecutive year of serious underwriting losses, in part because of higher claims due to a rise in natural disasters.

AM Best’s recent Market Segment Outlook shows lenders struggling to meet costs as claims surge. This directly impacts customers who are seeing their rates creep upwards.

Insurance rates are up across the board, with homeowners insurance premiums up by about 35% nationwide from two years ago, according to a Policygenius study. Wildfire and tornado-prone states, as well as those facing other natural disasters on a regular basis, account for the largest increases in premiums.

Major carriers are feeling the effects most. A recent S&P Global report saw Farmers and USAA — two of the largest carriers in the U.S. — raise rates by 14.8% and 14.7% respectively this year. Another notable carrier, Liberty Mutual, raised rates by 9.8%, while Progressive’s rates went up by 9%.

Having enough insurance is vital. Having the appropriate insurance coverage is just as important. To ensure your insurance is suitable for your circumstances, visit Credible to check out plans, providers, and costs.

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Certain states are getting hit with higher rates and less coverage

Since one considerable factor in rates increasing is natural disasters, the states that get hit by storms most often are the states currently facing the highest rate increase.

Texas has faced a significant increase in homeowners insurance rates this year, with premiums rising by $425.5 million across the state this quarter, according to S&P’s data. This premium increase comes as insurance companies scramble to make ends meet.

"The risks on [insurance companies’] balance sheets are very significant and growing," Ceres Accelerator for Sustainable Capital Markets Managing Director Steven Rothstein said. "This is happening across the country, and across Texas. It is not just coastal Texas."

Hit with even higher premiums than Texas, Florida has had its fair share of rising premiums this year. Currently, Florida has the highest insurance rates in the country. This comes as no surprise considering Florida has seen a staggering number of natural disasters in recent years.

Florida is unique, however, as many fraudulent claims have also contributed to rising rates, according to the Insurance Information Institute.

"Floridians are seeing homeowners’ insurance become costlier and scarcer because for years the state has been the home of too much litigation and too many fraudulent roof-replacement schemes," Insurance Information Institute CEO Sean Kevelighan said.

Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. And, it’s so easy to get a free quote in minutes through Credible’s partners here.

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How to protect your homeowners insurance rate from rising

While the weather isn’t within your control, certain aspects that make up your homeowners insurance rate are. To stop your homeowners insurance rate from rising, consider the following tips:

  • Don’t be afraid to shop around frequently: Regularly shopping for homeowners insurance helps you ensure you’re getting the best rate possible.
  • Ask your agent about discounts: Many insurance companies have discounts for bundling or paying your bill in full, so take advantage of these if you can. Discounts help lower your monthly bill.
  • Implement disaster resistance home repairs: Adding storm safe windows and making other disaster-proof repairs to your home can help you potentially secure a discount and could lessen your need to make a claim.
  • Review your deductible: Opting for a higher deductible means you’ll pay more out of pocket if you need to make a claim, but it drops your monthly payment.

Credible can help you easily check rates from multiple companies all in one place, ensuring you have the best rate possible. 

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