Policygenius has completed an in-depth analysis of home insurance premiums and reports that 94% of homeowners saw rate increases at renewal at an average 21% rise in cost from May 2022 to May 2023.
Homeowners on the East Coast saw the smallest premium increases, with Vermont (10%), New York (11%), and Maine (13%) leading the pack, while Florida (35%), Idaho (31%), and Colorado (30%) saw the largest increases.
Ironically, California, which seems to have the most issues with fires, mudslides, and earthquakes, saw only an 11% increase.
Two-Year Premium Increases are More Alarming
According to the analysis, the numbers jump significantly in reviewing home premium increases from May 2021 to May 2023. In fact, U.S. home insurance premiums are currently 35% higher than they were two years ago.
On the high end of the spectrum, Florida homeowners have seen a 68% increase. In contrast, Vermont homeowners saw only a 7% increase overall as their rates decreased between 2021 and 2022.
Why is This Happening?
As you can guess, extreme weather and climate disasters drive these premium increases. While the total number of natural disasters in the U.S. in 2022 equaled the annual average over the previous ten years, Hurricane Ian was the second-costliest storm in history.
Fewer options for home insurance shoppers is also impacting rates. Several large insurance companies, such as State Farm and Allstate, have stopped taking new customers in California and many coastal communities. The remaining providers have implemented stricter underwriting criteria and increased rates to meet higher demand.
Inflation, supply chain issues, and labor shortages are also driving costs up. According to the U.S. Bureau of Labor's Producer Price Index, residential construction costs have risen 34% since March 2020.
How Does Virginia Look?
Over the past two years, Virginia homeowners have seen the following:
In early 2021, the average premium was $856. That increased to $960 ($104 increase) upon renewal - a 12% increase.
At the start of 2022, the average premium was $911*. That increased to $1,109 ($198 increase) upon renewal - a 22% increase.
Forbes predicts an average 9% increase in home insurance costs in 2023 across the nation, driven primarily by inflation and supply chain concerns. Coastal regions will see greater increases and fewer options as well.
Mutual Assurance remains committed to providing fair pricing while remaining responsible to all of its members. Our policyholders are not immune to the same influences driving costs up. Still, our Perpetual Policy structure, where they pay a small percentage of the annual premium rather than the entire premium, keeps our coverage more affordable over the years.
* The difference between 2021 and 2022 starting premiums is due to new and canceled policies affecting the average.
Sources: Policygenius, Forbes