As Rates Rise, Majority of Homeowners Say Insurance Industry Is in Crisis, Survey Shows

Homeowners are cutting back on dining out, travel, groceries and even medication to afford their soaring property insurance premiums. One in 10 are considering relocating to an area with lower premiums.

Within the last five years, homeowners’ insurance premiums have spiked by 34% nationwide, with 61% of homeowners reporting higher rates in the previous 12 months and over one in 10 saying their premium has doubled or more than doubled, according to Claimguide.com’s recent survey of 1,500 homeowners. Nearly one in four (23%) say they have cut back on other expenses, including dining, travel, groceries, and medications to pay for home insurance coverage.

The survey found that one in ten homeowners has increased their deductible to lower their premiums, and if given the option, one in five homeowners would risk living without coverage if it wasn’t required by their mortgage lender.

Over half of homeowners (62%) said the home insurance industry is in crisis.

Shopping for Savings

Higher prices are driving homeowners to shop, but 73% report that their options are too limited. While 31% say they have shopped in the last 12 months, 27% say they are struggling to find an affordable provider. On average, respondents reported paying $166.41 per month ($1,997 annually) for home insurance coverage.

Still, one in five plan to switch providers in the next 12 months.

Other homeowners are just hoping to hold on to coverage, with one in ten fearing their company will drop their policy within the next year.

Why Are Premiums Rising?

About 40% of homeowners blame insurance companies’ greed for rising costs, and 86% say insurance providers are using inflation as an excuse to raise premiums.

However, two-thirds agree that climate change and more severe weather events likely contribute to high premiums.

The majority (73%) believe the insurance industry should have more robust regulations.

Home Risk Versus Insurance Costs

Nationwide, more than 10.6 million homeowners live without home insurance, roughly 7.4% of homeowners.

The top five states with the most uninsured homeowners are Mississippi, New Mexico, West Virginia, Louisiana and Alabama. Hurricane-prone Florida ranks among the top 10, with one in 10 homeowners without home insurance.

Coastal states and regions are most likely to have coverage, with Washington, D.C., claiming the highest insurance rate – just 3.3% of homeowners are uninsured. Oregon (4.7% uninsured), California (4.9%), Massachusetts (5.4%), and New York (5.4%) are similarly risk averse.

Managing Costs

Rather than cutting back on living expenses or skipping homeowners’ insurance altogether, investing in home improvements to reduce insurance costs can pay off in the long run, said Gerard Reczek, a ClaimGuide.org insurance specialist.

“Roof updates to meet new wind guidelines for coastal properties and other high wind areas affords homeowners additional protection and can reduce insurance cost,” said Reczek, who has over 40 years of experience as a broker and underwriter. “Insurance companies will lower premiums and reduce wind deductibles with recommended roof construction improvements.”

Investing in home security and updating infrastructure such as wiring and plumbing are additional ways to help save. Because claims can result in higher premiums, homeowners should weigh the cost of repairing the damage out-of-pocket against their deductible before making a claim.

According to Reczek, homeowners should also review their insurance policies at least once before each renewal.

“Reviewing your insurance policy is always prudent,” said Reczek. “Understanding potential hazards and exposures to your area and home allows you to address any concerns in advance. Reading policy exclusions for flood, wind, and earthquake will direct you to policy limitations you should address. Taking ownership in policy coverage and policy exclusions should prevent any surprises after a loss.”