Why Has My Home Insurance Premium Increased?

Home insurance premiums are rising rapidly due to the increase in billion-dollar weather disasters. According to a new analysis by the climate risk firm First Street, some disaster-prone cities can expect even steeper increases in the coming decades.

Projected Increases in Insurance Premiums

By 2055, premiums are expected to rise significantly in several cities:

• Miami: +322%

• Jacksonville, FL: +226%

• Tampa, FL: +213%

• New Orleans: +196%

• Sacramento, CA: +137%

These increases are driven by growing climate risks, such as hurricanes and wildfires.

Key Factors Behind Premium Increases

First Street estimates that, nationwide, risk-based pricing would lead to a 29.4% increase in average home insurance premiums by 2055, due to:

• Correction for current undervaluation: +18.4%

• Increase due to climate risks: +11%

Additionally, flood insurance rates are expected to rise significantly, with flood damage projected to increase by 28% nationwide and even more in cities such as:

• New Orleans: +533%

• Atlantic City, NJ: +296%

Impact on Insurers and State Regulations

The increase in premiums reflects the growing financial pressure on insurers, which have paid out more in claims than they have collected in premiums since 2020. Despite recent increases, many policies remain undervalued due to state regulations, such as:

• California: 7% cap on annual rate increases.

• Florida: 15% threshold for rate hikes.

This discrepancy could lead to sharp increases in the future or the withdrawal of insurers from high-risk areas.

Conclusion

The impact of climate change and market regulations is significantly affecting home insurance premiums. It is crucial for homeowners to stay informed about the risks and available options to effectively protect their properties.