When Joy Sharp built a new home in the small coastal community of Wilmington, North Carolina, about eight years ago, her homeowners insurance cost was a relatively modest $1,400. That was then.
Now, and after a series of violent storms slammed the Atlantic coast in recent years, her annual premiums have more than quadrupled. “Now I’ve been given renewal rates of $6,000,” Sharp, 39, herself an insurance agent, told CBS News. “So, it’s just every year, it goes up and up and up, and it’s not coming down.”
Florida resident Sam Weitzner and his wife, have been similarly socked since buying their Orlando home in Orlando in 2017. Their homeowners coverage has surged from $1,500 to nearly $6,000 a year, affecting their finances and forcing them to change insurers.
“Ultimately we decided to switch because, of course, obviously, the cost was too high,” he told CBS News. “It was affecting our mortgage payment and we just weren’t able to make ends meet with that. And so, it just became a priority because we knew that in order to be insured and continue owning our home, it was the only course of action.”
Sharp and Weitzner are hardly alone. Millions of Americans face rising homeowners insurance rates as natural disasters linked to climate change increase costs for insurers.
Home insurance rates around the nation jumped an average of 11.3% in 2023, with owners in Arizona, Texas and Utah seeing spikes of more than 20%, according to S&P Global Market Intelligence. Homeowners in Delaware, Hawaii, Mississippi and Vermont saw the lowest insurance rates increases, ranging between 2% and 4% last year.
“This is crazy”
Still, even more modest increases add up to hundreds of extra dollars every year for coverage, enough to frustrate Americans who are still coping with persistent inflation. Sharp recalls being shocked to learn she would have to pay nearly $6,000 under her revised home insurance policy without a commensurate increase in coverage.
“I kind of thought it was a joke,” she told CBS News. “I kind of thought, OK, where are my discounts? This has got to be like the three-year policy or else this is crazy. The rates went up, but the coverage on my home did not increase very much. I mean, that’s a budget buster that just destroys all the economics.”
The housing industry, already grappling with the impact of the highest mortgage rates in years, has taken notice. More than 20 housing organizations, including the powerful National Association of Home Builders and the National Multifamily Housing Council, urged the Biden administration and Congress in a letter this week to address the causes of rising insurance premiums.
Affordable housing providers, in particular, are facing sharply higher premiums — nearly 1 in 3 policies experienced rate increases of at least 25% in the most recent coverage renewal period, the groups said. They also underlined the impact of natural disasters in driving up costs.
“Starting around 2017, the property insurance market began to destabilize as more frequent natural catastrophes occurred,” the letter states. “Insured losses arising from natural disasters were calculated at $121 billion and almost $125 billion in 2021 and 2022, respectively, which are both well above the 10-year average of $81 billion.”
Among other potential remedies, the housing coalition is calling for the creation of federally backed homeowners insurance.
Insurers have either exited or stopped renewing policies in disaster-prone states like California, Florida, North Carolina, Oklahoma and Texas. Insurers say writing policies in those areas is too risky because of the increased likelihood of wildfires, tornadoes, hurricanes or earthquakes. The increasing frequency and severity of extreme weather — which scientists link to climate change — means bigger payouts by insurers, leading to higher premiums for millions of Americans.
Weather is the main reason insurance rates are climbing, but inflation is also playing a role, said Daryl Fairweather, chief economist at Redfin.
“When inflation is on the rise, it basically means that the cost of everything is going up,” Fairweather told CBS News. “And that includes the cost of maintenance for homes, the cost of remodeling homes. And that goes into the equation for home insurance.”
Source Agencies
