Homeowners Insurance Premiums Increased 59% Over The Past Decade, ValuePenguin.com Finds.
California, Nebraska, South Dakota, Illinois and Utah will see the sharpest jump in insurance premiums in 2020.
Jun 04, 2020, 08:05 ET
NEW YORK, June 4, 2020 /PRNewswire/ -- The cost of homeowners insurance has risen considerably in recent years, and will continue to rise in 2020 according to a new report from ValuePenguin.com by LendingTree (NASDAQ: TREE). In 2010, the average annual cost of homeowners insurance across the country was $909. As of 2020, ValuePenguin analysts estimate that the average cost of home insurance is $1,445 — a total increase of 59% over the last decade.
With sustained growth in property values across the country as well as an increase in the impact of natural disasters like hurricanes and wildfire, the growing demand for homeowners insurance is likely to continue driving rates upward.
- ValuePenguin.com analysts predict higher home insurance rates in 31 states: Each year, states require insurance companies to submit a rate filing that describes how they plan to adjust their rates in the next year. According to rate filings from the past five years, 31 states have seen home insurance rates outpace the cumulative rate of inflation (9.14%). The states with the greatest increase in rate filings for 2020 include California, Nebraska and Illinois.
- Insurance companies seek to compensate for an increase in their loss ratios by raising the rates they charge for coverage. In states where insurers post very high loss ratios, rates tend to increase significantly in the following years. For instance, California's devastating Camp Fire in 2018 led to $16.5 billion in wildfire damages. As a result, the state's insurance industry experienced a loss ratio well over 100%, and their rate filings for 2020 reflected the most aggressive increases in the country.
- Rising construction costs drive homeowners insurance premiums up: Homeowners insurance covers the cost of rebuilding or repairing residential structures, which is why insurer rates are influenced by increases in the local price of materials and labor. Where states have experienced severe disasters and a spike in construction demand, shortages have led to insurers raising their rates.
- What should homeowners do to save money? Switching insurers is one of the most effective ways to control homeowners insurance costs, especially for insurers who raise premiums year on year. Homeowners who want to stay with their insurer can also look into raising their deductible. Increasing their homeowners insurance deductible from $500 to $1,000 will decrease homeowners insurance premiums by 13%, and increasing it from $500 to $5000 will decrease premiums by a third.
According to Chris Moon, Insurance Product Manager at ValuePenguin.com, "COVID-19 may mitigate this trend in 2021. The large number of Americans staying home right now has significantly lowered the risk of unattended fires or leaks as well as burglary." He added, "Homeowners may end up filing more claims in the short term as they notice things that they might not have had time for previously, but once that "backlog" is dealt with, the long-term effect of staying at home is less risk of damage."
ValuePenguin.com analysts calculated projected home insurance rate increases in 2020, by looking at data and loss ratios from public insurer filings across the country, and rate filings and reported loss ratios from the top 10 insurance groups by market share across all 50 states. To view the full report, visit: https://www.valuepenguin.com/homeowners-insurance#rates-forecast
Here's How Much Home Insurance Rates Will Change |
||
State |
Rate Change |
Industry Loss Ratio |
California |
6.30% |
113% |
Nebraska |
5.60% |
88% |
Illinois |
5.40% |
69% |
South Dakota |
4.30% |
78% |
Utah |
4.20% |
54% |
Rhode Island |
4.10% |
55% |
Georgia |
4.00% |
67% |
Virginia |
3.80% |
57% |
Idaho |
3.50% |
73% |
New Mexico |
3.50% |
65% |
Washington |
3.50% |
57% |
Kansas |
3.40% |
46% |
Maryland |
3.40% |
63% |
Florida |
3.30% |
62% |
Massachusetts |
3.20% |
52% |
Minnesota |
3.10% |
57% |
Connecticut |
2.80% |
48% |
Wisconsin |
2.80% |
51% |
Hawaii |
2.70% |
35% |
Nevada |
2.70% |
53% |
Alabama |
2.50% |
51% |
Arizona |
2.30% |
60% |
Arkansas |
2.30% |
53% |
Montana |
2.10% |
80% |
New York |
2.10% |
48% |
Oregon |
2.10% |
54% |
Delaware |
2.00% |
50% |
Iowa |
1.90% |
62% |
North Carolina |
1.90% |
60% |
Oklahoma |
1.60% |
42% |
Pennsylvania |
1.60% |
54% |
Texas |
1.60% |
64% |
North Dakota |
1.50% |
50% |
Missouri |
1.40% |
56% |
New Hampshire |
1.40% |
48% |
New Jersey |
1.20% |
49% |
Colorado |
1.00% |
94% |
Maine |
1.00% |
43% |
Michigan |
1.00% |
57% |
Mississippi |
0.90% |
46% |
South Carolina |
0.90% |
47% |
DC |
0.80% |
52% |
Indiana |
0.60% |
52% |
Ohio |
0.50% |
46% |
Tennessee |
0.40% |
52% |
Wyoming |
0.40% |
78% |
Louisiana |
0.10% |
34% |
Kentucky |
0.00% |
50% |
Vermont |
0.00% |
49% |
West Virginia |
-0.60% |
55% |
Alaska |
-0.70% |
46% |
About ValuePenguin.com: ValuePenguin.com, part of LendingTree (NASDAQ: TREE), is a personal finance website that conducts in-depth research and provides objective analysis to help guide consumers to the best financial decisions. ValuePenguin focuses on value, assessing whether the return of a particular decision is worth the cost or risk of that option, and how this stacks up with the other possible choices they may have. For more information, please visit www.valuepenguin.com, like our Facebook page or follow us on Twitter @ValuePenguin.
Additional Information: https://www.valuepenguin.com/average-cost-of-homeowners-insurance
Media Contact:
Divya Sangam (Ms.)
646 693 8445
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SOURCE ValuePenguin.com
