Home insurance costs 3x what they were 6 years ago

CrustyRedXpress said:

In reply to The0retical :

Alternate theory-the amount of risk from climate driven events (fires and floods mostly) has increased, possibly in ways the insurance companies can't quantify yet, and that increase has to be passed on to the customer. 

In reply to ShawnG :

This is why wealthy people sometimes choose to self-insure, or insure with much, much higher deductible.  

 

Sounds like something an insurance company would say. 

20 years ago we (Florida) got 4 Hurricanes in a row that were gnarly. 1992 Andrew wiped the tip of the state off the map. 1935 The Great Labor Day Hurricane saw some of the lowest barometric pressure ever recorded. These big storms aren't anything new....

I bought my home in Central Florida in 2015, my insurance policy for the year was $919. The following year it went to $1800. I shopped new policies immediately. I found something that was $1200 which was reasonable. I stayed with that company for a few more years until a hail storm came through and put holes in my roof. I recorded videos of the storm because of the cars in the driveway for evidence. They fought it all the way until I threatened legal recourse. They replaced the roof then dropped me. Luckily USAA started offering their own insurance in the state but that policy is now $3600 a year. So over 10 years it has gone up 4x. 1 claim (now 2), 1900sq ft home, on a zero lot line home. It's insane because I can tell you my salary hasn't increased 4x. I often wonder if it's worth having these things but my ex-wife who now occupies the home with my kids had a catastrophic water incident where the plastic coupling on the hose that goes from the wall to a toilet failed while she was out of town. About 3 inches of water in the home and insurance has paid out well over half of what I paid for that home for personal property, remediation, repairs, and a rental for the ex and the kids. Surprisingly my policy only went up like $400 when it renewed. Despite USAA off-shoring all their jobs and claiming to be a proud supporter of the US and Vets, they still are halfway okay.

Their auto insurance rates are something else. That's a story for another day but they wanted over $400/month when I acquired a 2023 Raptor. I paid 70% less than that for a 2022 I owned. No accidents, no tickets, no claims on my autos in over 13 years of being with them, and their argument was "It's the uninsured motorist Sir" well E36 M3 I'm about to join them. 

DirtyBird222 said:

CrustyRedXpress said:

In reply to The0retical :

Alternate theory-the amount of risk from climate driven events (fires and floods mostly) has increased, possibly in ways the insurance companies can't quantify yet, and that increase has to be passed on to the customer. 

In reply to ShawnG :

This is why wealthy people sometimes choose to self-insure, or insure with much, much higher deductible.  

 

Sounds like something an insurance company would say. 

20 years ago we (Florida) got 4 Hurricanes in a row that were gnarly. 1992 Andrew wiped the tip of the state off the map. 1935 The Great Labor Day Hurricane saw some of the lowest barometric pressure ever recorded. These big storms aren't anything new....

They are kinda new:

https://science.nasa.gov/earth/climate-change/a-force-of-nature-hurricanes-in-a-changing-climate/

Although certainly not the only factor. More damaging storms, higher construction costs, denser populations in areas likely to be hit and insurance industry profiteering are all factors. The last article I linked has a good overview:

https://www.vox.com/climate/377094/hurricane-milton-helene-home-insurance-flooding-damage

GameboyRMH said:

DirtyBird222 said:

CrustyRedXpress said:

In reply to The0retical :

Alternate theory-the amount of risk from climate driven events (fires and floods mostly) has increased, possibly in ways the insurance companies can't quantify yet, and that increase has to be passed on to the customer. 

In reply to ShawnG :

This is why wealthy people sometimes choose to self-insure, or insure with much, much higher deductible.  

 

Sounds like something an insurance company would say. 

20 years ago we (Florida) got 4 Hurricanes in a row that were gnarly. 1992 Andrew wiped the tip of the state off the map. 1935 The Great Labor Day Hurricane saw some of the lowest barometric pressure ever recorded. These big storms aren't anything new....

They are kinda new:

https://science.nasa.gov/earth/climate-change/a-force-of-nature-hurricanes-in-a-changing-climate/

Although certainly not the only factor. More damaging storms, higher construction costs, denser populations in areas likely to be hit and insurance industry profiteering are all factors. The last article I linked has a good overview:

https://www.vox.com/climate/377094/hurricane-milton-helene-home-insurance-flooding-damage

I appreciate you posting an article to back up your argument; however, history and experience also refute that but there is validity to both arguments IMO. Maybe they are getting bigger or not following traditional paths but this planet is changing, always has, and always will. It's that one constant that we know of in everything. 

Insurance companies have some great lobbyist and their practices really need to be put into check. 

Insurance companies claim it's getting worse.

Banks will still issue a mortgage for waterfront property.

Hmm...

ShawnG said:

Insurance companies claim it's getting worse.

Banks will still issue a mortgage for waterfront property.

Hmm...

Because the value building on the waterfront property is mostly irrelevant to the value of the land itself, which the bank will still own if it gets foreclosed.

Hmm...

In reply to Duke :

Contrary to what people think, banks don't want to own land.

They really don't want to own land where one can't get insurance on whatever is built there.

Most banks will not issue a mortgage unless the new owner can show proof of insurance at closing.

porschenut said:

Ian F (Forum Supporter) said:

Definitely location-dependent.  SE PA, Philly suburb. Small house on a small lot in a largely blue-collar area.

Home insurance: 2020 to 2021 - stayed about the same.  Less than 10% jump for 2022.  About a 15% jump for 2023 and then another 15% jump for 2024.

Township and School taxes have barely risen at all over the last 5 years. 

To be honest, the possible increase in insurance and taxes is one of the main reasons I've procrastinated on my house renovation.   What I want vs. the likely increase in operating costs.  Especially as I look at hoping to retire ASAP and will be living on more of a fixed income. 

I am in the same region, and retired on a fixed income.  When Farmers hit me with similar increases I dumped them.  Not sure exactly where you are, but in my area(central bucks county) real estate value increases will justify home renovation.  And since we have not found a better place to live fixing stuff just made sense.

I'm in Lower Bucks. Adjusted for inflation, my home's value has increased some, but not like it has where you are.  It helps (or hurts?) that my twp has a reputation for crap schools so anyone with kids and means moves to areas with better schools. 

What I meant was:  Renovation = repair + expansion (I'd love to add a second floor living space and open up the first floor to just be a kitchen/dining/living area as well as rework the basement access) vs. renovation = repairing the house as-is and not really changing anything.   I am assuming the former would increase both my insurance and taxes since I would be significantly increasing the living space of the house.   The latter basically just fixes everything that is currently broken (which is a LOT) which in theory should have minimal affect on insurance and taxes.  I have one of the least-valued houses in my neighborhood, so the property wouldn't be out of place if I almost doubled the value. 

DirtyBird222 said:

GameboyRMH said:

DirtyBird222 said:

CrustyRedXpress said:

In reply to The0retical :

Alternate theory-the amount of risk from climate driven events (fires and floods mostly) has increased, possibly in ways the insurance companies can't quantify yet, and that increase has to be passed on to the customer. 

In reply to ShawnG :

This is why wealthy people sometimes choose to self-insure, or insure with much, much higher deductible.  

 

Sounds like something an insurance company would say. 

20 years ago we (Florida) got 4 Hurricanes in a row that were gnarly. 1992 Andrew wiped the tip of the state off the map. 1935 The Great Labor Day Hurricane saw some of the lowest barometric pressure ever recorded. These big storms aren't anything new....

They are kinda new:

https://science.nasa.gov/earth/climate-change/a-force-of-nature-hurricanes-in-a-changing-climate/

Although certainly not the only factor. More damaging storms, higher construction costs, denser populations in areas likely to be hit and insurance industry profiteering are all factors. The last article I linked has a good overview:

https://www.vox.com/climate/377094/hurricane-milton-helene-home-insurance-flooding-damage

I appreciate you posting an article to back up your argument; however, history and experience also refute that but there is validity to both arguments IMO. Maybe they are getting bigger or not following traditional paths but this planet is changing, always has, and always will. It's that one constant that we know of in everything. 

Insurance companies have some great lobbyist and their practices really need to be put into check. 

The Florida Office of Insurance Regulation Has annual reports going back 20 years available on their website providing oversight of insurers operating in Florida (I believe all states have the same basic functions and data available). 

https://www.floir.com/home

I didn't have a ton of time to review but pulling data from 2004/2011/2021 shows that total premiums and payouts for Homeowners multiple peril have gone from:

2004 Premium: $3.65B      Payout:$1.24B     Losses/Premium Collected 34%

2011 Premium: $6.39B       Payout:$2.39B     Losses/Premium Collected 37.5%

2021 Premium: $9.3B        Payout: $5.94B     Losses/Premium Collected 69%

That is Totals, and it is Entirely possible I misunderstand the report but it looks like in the last 20 years Paid claims in Florida have gone up by about 5X, Premiums about 3X.  The last report I found was for 2021.  I can't imagine that these numbers haven't gotten larger.  

Now this does ignore the # of policies written.   But the population of FL was 18M in 2004 and 22M in 2021, so 1.2X the number of residents so probably a similar increase in the number of insured properties.  

So ~20% more Properties, 5X the loss over a ~18 year period.  I'm sure the trends have continued over the last 3 years.

Seems that the losses are increasing at a rate that justifies the increases.   But again it is entirely possible I am misunderstanding the report.  I also literally only looked at those 3 years it is possible they are extreme outliers and all the other years show no growth from 2004.  If someone is an expert on FLOIR reports please provide a breakdown.   If my information is flawed I apologize.

In reply to Ian F (Forum Supporter) :

Guessing Bristol Twp schools.  Shame, they don't have the best reputation.  If your value is low for the area some improvement could be justified but don't expect a 100% return.  Same on stuff that is broken.  We did new Heat and AC because they were both 30 years old and replacement when I could shop for prices instead of being in a panic made sense.  You might want to talk to a realtor about the decision, correction talk to a few as opinions vary.

In reply to nocones :

That sounds correct.  In CA, where insurance is HIGHLY regulated (in some cases / all(?) they need to get permission to raise rates).  Fire Insurance is shooting up, and in many cases simply not offering it for some, or even fleeing the state. The CA fire issue, is similar to Florida's hurricane issue, but a bit less general (there are areas that are clearly much lower risk, which almost isn't the case in Florida).

I have a friend, who is an ex firefighter, whose insurance has shot up and he is strongly considering making sure his valuable are easily removed (or safe) and canceling his insurance.  He is in the hills, but in an area that is very unlikely to suffer a fire, so likely a good bet for him. I told him to at least take what would be his insurance premium and put it in a savings account for emergency purposes.

In reply to porschenut :

Yep. But if you're a SINK or DINK, it's a great place to live - low(ish) CoL and easy access to I-95 & PATP and public transport (I can walk to a Septa station).  I even live in a neighborhood relatively friendly to "car guys" as I'm not the only one on my street with a bunch of them.

I have no plans to move anytime soon, so resale value or return on investment isn't a high priority.  I want to make changes to make the house nicer for ME to live in.  I would like to rework the access to the basement. Why?  So it would be easier to store and work on my bicycles down there, rather than in my living room (which currently looks like a bike shop). 

The HVAC is also over 30 years old.  It still works, but it's definitely overdue for replacement.  I would also like to convert to natural gas - mainly to get the damned oil tank out of the basement.

There is a lengthy list of work that needs to be done to the house - far too much for this thread and to the point where just knocking the house down and rebuilding from the foundation up wouldn't be a crazy idea. 

But again... finding that balance between improving my living conditions vs. the likely increase in expenses since a larger house = higher utility costs as well as insurance and taxes.

ShawnG said:

If I took all the insurance payments I've made over the last 30 years and put them into a safe investment with reasonable returns, I'd have had enough money to more than cover any of the claims I've made, plus a quite a bit.

Insurance is a gamble - you bought it in case it burned to the ground 6 months into the first policy.  You'd be $300,000 ahead of the game. 

They bet (hope) you'll never make a claim in 30 years then they win. 

Also it frosts me when my insurance company sponsors stadiums and 1000's of funny commercials.  

In reply to Datsun240ZGuy :

It would be easier to swallow if I knew that they would simply abide by the contract signed when I did have a claim instead of the almost certainty of having to get a lawyer involved to get what I paid for.

My grandfather worked for Sears.  My dad ended up with a bunch of Allstate stock and I own some of it.  

My Allstate guy retired and some random lady ended up with my account. She was awful and my rates went up. I was done with Allstate. 

So I tell her to keep raising the rates as I enjoy the quarterly dividends but I'm headed over to State Farm which now sort of sucks too. 

The agent has about zero to do with rates. Those are set by underwriting. 

Allstate is terrible for auto insurance. They are one of the biggest cheapskates out there when it comes to paying for what is needed. USAA mentioned earlier suffers from really bad service; seems like they are heavily understaffed. I've had several customers of USAA complain they haven't heard from their claim staff while we are already at the point of settling with them.

There is a lot wrong with the industry. They were able to coast along doing an okay job for a long time when things were fairly constant. Now, costs have risen so rapidly a lot of them are scrambling to figure out how to raise prices without losing customers. They also let a lot of staff go during the Kung Flu and are playing catch up with that. 

Again, can't speak to property claims because I don't work them but if I were shopping auto insurance I'd ask my local body shop which ones they have the most trouble from. Chances are they will also be the ones with all the banners at the local sports arena.

In reply to ddavidv :

Asking shops about trouble they've had a - that seems like a great idea.
 

of course, if the delta is very big between cheapest and best, with the risk of needing insurance so low in the first place (hence the existence of insurance companies), I think I would find it hard to justify paying anything over the bare minimum. 

"bare minimum" meaning what? Minimum liability? In my state for auto insurance that is a paltry $5000 property damage coverage. If you hit someone else's Lexus and total it your insurance writes them a check for $5000 and says, "Have a nice day and good luck".  Then you get sued for the difference it didn't cover. Not worth the couple hundred bucks per year you 'saved'.

Same with not carrying collision coverage on anything worth at least $5000. I carry it on $2500 cars, because I've worked here too long. If you've got a lot of $ in the bank, go for it. But most folks will be financially challenged if they don't have decent insurance. 

Again, I come at this from an auto and not property perspective. 

DirtyBird222 said:

I appreciate you posting an article to back up your argument; however, history and experience also refute that but there is validity to both arguments IMO. Maybe they are getting bigger or not following traditional paths but this planet is changing, always has, and always will. It's that one constant that we know of in everything. 

Insurance companies have some great lobbyist and their practices really need to be put into check. 

XKCD did a great graph tracking the change in average temperatures over time from 20,000bce (the last ice age) to 2016.

At that time, 2016 and 2020 tied for the hottest years in recorded history with an average temperature of 14.8*c. 2023 set a new record with an average temperature of 14.98*c.

See reinsurance.  (I bet you didn't know that insurance companies bought insurance.  Or maybe you did.)

Reinsurance companies, or reinsurers, are companies that provide insurance to insurance companies. Reinsurers play a major role for insurance companies as they allow the latter to help transfer risk, reduce capital requirements, and lower claimant payouts.

And why do I know anything about something so boring as this?

My older brother used to work in reinsurance.

In reply to ddavidv :

"Bare minimum" being "the lowest priced insurer, regardless of reputation, for the coverage that I desire"