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As Natural Disasters Get Worse, So Do Home Insurance Premiums

As natural disasters wreak ever more havoc across the country, so are they upending the home-insurance industry, which is passing along the upper costs of home maintenance to policy holders.

According to a study by Policygenius, an internet insurance marketplace, U.S. insurers paid out $99 billion in claims related to natural disasters in 2022. As a result, premiums rose by a median of 21 percent from May 2022 to May 2023, dwarfing the 12 percent increase through the previous 12 months. The study examined greater than 17,000 policies renewed with Policygenius across 46 states and Washington, D.C., omitting 4 states where adequate data wasn’t available.

Rates increased by a median of 35 percent in Florida, essentially the most of any state. Hurricane Ian, which hit in late September, turned out to be the most costly hurricane within the state’s history. In Idaho, where many homes are vulnerable to wildfires, owners paid a median of 31 percent more. Colorado, South Dakota, Louisiana and Texas also saw marked rate increases as residents confronted more losses from natural disasters and fewer insurance options. (East Coast states saw the smallest rate increases at renewal in 2023.)

Indeed, some insurers are cutting their losses. Over the summer, Farmers Insurance announced it will not renew a few third of its policies in Florida, while other insurers simply went out of business. In California, State Farm, the state’s largest insurer, stopped issuing recent policies this spring. But as the necessity for insurance grows, rates will proceed on their upward trajectory.

Also contributing to higher premiums: Inflation and supply-chain problems, which make repairs dearer, and soaring home prices normally. This week’s charts shows the places where rates climbed essentially the most and the least, in line with the study.

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