Pooled risk means homeowners in Wyoming could see their rates go up too
of ConsumerAffairs
If you followed the devastation from the two recent hurricanes from the safety and comfort of your home, dont think you havent been affected. Because of the widespread devastation, property insurance rates will likely go up even more.
Not just the victims rates yours too.
In a recent ConsumerAffairs interview, Gregg Barrett, CEO of the WaterStreet Company, a software firm supporting the insurance industry, said that in areas like Florida and Iowa, which often have severe weather, insurers have either raised premiums significantly or opted to reduce their exposure. That happened in the spring after the outbreak of tornados in the Midwest.
Even for consumers in states unaffected by these tornadoes, the financial repercussions still apply, he told us. Insurance operates on a model of pooled risk, so the costs of disasters are often distributed across their customer base.
In other words, even if you havent made a claim in years, your homeowners insurance premiums could go up to help pay for the damage in North Carolina and Florida from hurricanes Helene and Milton.
That said, homeowners in the paths of these storms can expect to pay even more, if they can even get insurance at all. According to Bezinga, Hurricane Helenes losses for insurance companies were estimated to be between $3 billion to $6 billion. And of course, that doesnt count Miltons devastation.
Insurance costs in Florida are the highest
The average cost of homeowners' insurance in Florida is now estimated to be more than $11,000, making it the highest in the nation. However, as we reported in August, some homeowners can no longer purchase insurance because of where they live.
An insurance broker said most insurance companies have blocked out areas of California where they dont insure homes because theyre likely to have to pay expensive claims.
In 2023, the Consumer Financial Protection Bureau (CFPB) said that in response to the extreme weather events and natural disasters America has faced, some home insurance companies are going out of business.
In California which rarely has hurricanes and tornados but does have wildfires and mudslides several insurers have stopped selling home policies completely. California was such a lose-lose proposition that State Farm pulled out.
Farmers decided Florida was too risky. Still, others have hiked the price of insurance to a breaking point that many homeowners cant afford.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-10-11 00:17:23
