William Simpson
Maintaining home insurance has become an increasingly difficult task for millions of Americans, especially those living in the growing number of areas of the country prone to natural disasters.
Major insurance companies, including Allstate and State Farm, have stopped renewing policies in states with extreme weather conditions, such as California and Florida, forcing residents there to find another insurer with a higher premium. AAA last year also decided not renew some policies in Florida, a state that has seen an increase in severe storms and coastal flooding.
Homeowners rely on their insurance policies to help with the high price of paying for damage to their property in the event of accidents and severe weather. But insurers say they are pushing back in certain states because the possibility of extreme damage from floods, hurricanes or fires makes it too expensive for residents to insure.
The remaining insurers, however, chose to increase their rates. Travelers Insurance, for example, got permission from California state regulators this week to raise homeowner rates by an average of 15.3%. The rate change will affect more than 320,000 Californians who now have Travelers coverage, according to documents the company filed with state regulators.
Travelers said in the state document that it sought to increase rates in part due to “changing weather conditions.”
“The approved adjustments to our California home insurance rates are a necessary step to align pricing with the risks our customers are facing,” the company told CBS MoneyWatch in an emailed statement.
Americans pay an average of $2,153 a year, or $209 a month, for home insurance, according to insurance industry data provider Quadrant Information Services. Florida’s average annual price leads the nation at $6,366, while Californians pay an average of $1,452, according to Quadrant.
But the homeowner’s premium often increases after switching providers, Matthew Eby, founder and CEO of the First Street Foundation, told CBS News. After a homeowner is dropped from their previous insurer, they typically discover that their previous policy did not cover damage from wildfires or floods, Eby added.
“They go looking for a new policy and find out they’re not paying the right price,” he said. “The new price proportional to the risk could be 2, 3 or even 4 times higher than what they paid previously.”
Of course, Californians and Floridians aren’t the only ones facing home insurance problems. One January survey of Deloitte found that homeowners in 19 other states — including Louisiana, South Carolina and Texas — are seeing “dwindling coverage options and skyrocketing costs for their home insurance policies.”
Not all insurers are raising rates or leaving states, the Deloitte survey found. Some providers offer homeowners cheaper prices if they take steps to protect their homes from disasters.
“Some private insurers in Florida, for example, are offering discounts to policyholders who fortify their homes against hurricane-force winds, strengthening and protecting roofs and shutters, and reinforcing garage doors,” the company said.
