Homeowners face soaring insurance costs as violent storms wreak havoc

Insurers are increasing the cost of home coverage to offset the increased risk posed by severe storms of the type that torn in five states on Memorial Day weekend.

The storms left a trail of destruction in Arkansas, Kentucky, Oklahoma, Texas and parts of Virginia, destroying homes and killing at least 23 people. The increasing frequency and severity of extreme weather — which scientists link to climate change — means higher payouts from insurers, leading to higher premiums for millions of Americans.

“It goes without saying,” Oklahoma Department of Insurance Commissioner Glen Mulready told CBS MoneyWatch. “Everyone is getting hit by these storms, and that should lead to increased premiums to cover these losses. It’s unfortunate, but it’s true.”

In Oklahoma, the price of home coverage increased 42% between 2018 and 2023, according to a analysis from S&P Global. In 2024, the state has already experienced more than 90 tornadoes – more than double the number of twisters Oklahoma would normally see this time of year. To make matters worse, Oklahomans have experienced two Category 4 hurricanes this year, Mulready noted.

Home insurance rates in Arkansas and Texas soared 32.5% and 60%, respectively, between 2018 and 2023, according to S&P Global.

Insurers have also raised premiums for homeowners in states including Illinois, North Carolina, Oregon and Utah in recent years, in part due to extreme weather, said Scott Holeman, spokesman for the Insurance Information Institute.

Bad weather isn’t the only reason homeowners’ policies are getting more expensive.

“Last year, we saw accumulated losses for insurance companies due to storms, natural disasters, inflation and supply chain issues,” Holeman told CBS MoneyWatch. “The result is that many insurers are still in the red despite sharp increases in premiums. In four of the last five years, home coverage has been unprofitable for insurers.”

National Oceanic and Atmospheric Administration researchers to say Extreme weather events are increasing in both frequency and severity. In 2023, the US recorded a record value of 23 billion dollars. meteorological and climate disastersaccording to scientists. Researchers link such events, including catastrophic floodshot flashes, severe droughts It is huge forest firesto global warming.

Mounting financial losses linked to extreme weather events have led insurers including Allstate and State Farm to stop renewing home policies in parts of California and Florida. AAA last year also decided not renew some policies in Florida, a state that has seen an increase in severe storms and coastal flooding.

However, some insurers that have continued to offer coverage in states vulnerable to extreme weather are increasing your rates. Travelers Insurance, for example, this month won approval from California regulators to raise homeowner rates by an average of 15.3%.

Nationally, the average home insurance premium jumped from $1,081 in 2018 to $1,522 last year for people in a single-family property with a 30-year home loan, according to to mortgage buyer Freddie Mac. ]

Property damage caused by a natural disaster “is one of the biggest financial risks” a homeowner can face, according to to a May study from the Federal Reserve. Nearly 2 in 10 U.S. adults reported being financially impacted by a natural disaster or severe weather event in the past 12 months, the study found.