The Escalation of Home Insurance Prices
Homeowners across the United States are feeling the pinch as home insurance prices continue to climb, primarily driven by the escalating impacts of climate change and a turbulent market. According to the recently released 2023 Policygenius Home Insurance Pricing Report, the average premium for home insurance policies surged by a staggering 21% between May 2022 and May 2023. This increase is significantly higher than the 12% uptick reported the previous year, spanning May 2021 to May 2022.
The analysis, based on extensive internal data from Policygenius, encompassing over 17,000 policies renewing from May 2022 to May 2023, unveils a worrying trend. In every state, including the nation’s capital, Washington, D.C., the average premium increase exceeded the previous year’s rate. These sharp surges in recent years can be attributed to record-high losses in the insurance industry, increasingly severe climate-related disasters, prolonged wildfire seasons, and surging construction costs.
Key Findings of the 2023 Policygenius Home Insurance Pricing Report
The majority of Homeowners Face Premium Hikes
One of the most significant revelations of the report is that the overwhelming majority of U.S. homeowners encountered elevated insurance premiums upon renewal. Among the 17,000 home insurance policies assessed for renewal between May 2022 and May 2023, a staggering 94% were quoted a higher premium, in contrast to 91% of 10,283 renewals from May 2021 to May 2022.
Soaring Premiums Over the Past Two Years
The report underscores the dramatic surge in home insurance costs over the past two years, with several states that are prone to wildfires and tornadoes witnessing the most substantial average increases. Based on an analysis of 27,156 home insurance policy renewals from May 2021 to May 2023, Policygenius revealed that insurance premiums soared by an average of 68% in Florida, 47% in New Mexico, and 46% in Colorado, Idaho, and Texas during this two-year period.
The East Coast’s Milder Increases
In contrast to their counterparts in high-risk areas, homeowners in East Coast states experienced comparatively milder increases in their insurance premiums upon renewal in 2023. While residents in these states were spared the same level of sticker shock, home insurance premiums still rose by 10% in Vermont, 11% in New York, 13% in Maine, and 14% in New Hampshire compared to the previous year, according to the Policygenius analysis.
The Struggles of the Florida Market
The tumultuous market has driven many home insurance providers to either raise premiums or reduce coverage in high-risk regions to maintain profitability. Some providers have even gone out of business altogether due to these challenges. This crisis has been particularly acute in Florida, where homeowners experienced an average premium increase of 35% from May 2022 to May 2023, following a 10% increase in the preceding year.
“Given the industry’s ongoing challenges and the threat of climate change, it’s not surprising that home insurance premiums are continuing to rise,” remarked Pat Howard, a licensed property and casualty insurance expert at Policygenius. “For homeowners grappling with escalating costs, it’s crucial to understand that there are various ways to mitigate premiums. Re-shopping your home insurance through an independent marketplace can help ensure you’re not missing out on a more affordable option in these trying times.”
