The home insurance crisis strikes the American heart

The owners who live far from California forest fires and coastal floods know some of the largest peaks in insurance premiums.

Although the average cost of home insurance increases in almost all postal code across America, new research shows that the largest percentage increases between 2021 and 2024 in UTAH, Illinois, Arizona, Pennsylvania and Nebraska.

“The premiums have increased more quickly in hearts than coastal states,” Business Insider Douglas Heller, insurance director at the Consumer Federation of America and research co-author, told Business Heller.

The results show that the affairs of the assurance of home insurance extends far beyond the states of the Gulf coast subject to hurricanes and the floods or cities of California vulnerable to forest fires – which often make the headlines. Extreme thunderstorms in the wind, rain and hail also cause billions of dollars of losses in states between the slopes of the rocky mountains and the Appalachians.

Disasters, combined with inflation and rising costs of reconstruction of houses, increase bonuses and oblige certain insurance companies to reduce coverage in risky areas or drop customers. The consequences could be significant because most Americans cannot obtain a mortgage without home insurance, and the areas deemed too risky to cover could see the value of the properties drop.

“This insurance crisis is not a coastal crisis,” said Heller. “It is not a crisis of republican or democratic state. It affects every corner of the country. These dramatic rate increases make this critical financial security tool inaccessible because it is too expensive.”

Why residential insurance premiums are increasing so quickly in many states

The Federation of Consumption of America noted that between 2021 and 2024, UTAH average home insurance premiums jumped from 59% to almost $ 1,800 per year. In Arizona, they increased by 48% to more than $ 2,200 while the Illinois experienced an increase of 50% to almost $ 2,950. In Pennsylvania, average premiums increased by almost $ 2,000, and Nebraska, they increased by 35% to $ 5,127.

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Florida has the highest bonus in absolute dollars, with an average of almost $ 9,500 in 2024, but its average rates increased by a lower percentage compared to certain other parts of the country.

JP Morgan published on March 31 on March 31 which found states, including Colorado, Utah, Nebraska, Iowa, Minnesota and Illinois, experienced the most important percentage increases in home insurance costs between 2019 and 2024.

Mortal thunderstorms with high -speed winds, rain, hail and tornadoes – what scientists call “severe convection storms – torn a large band of the Midwest and South this year. In 2020, thunderstorms caused more than 11 billion dollars of damage after having torn states like southern Dakota, Nebraska, Illinois and Indiana According to a federal count.

“In recent years, these great losses that have occurred in the heart have come from violent convective storms, and they are those who lead to increases in premiums,” said Sarah Kapnick, global climate advice to JP Morgan who authorized his report.

Climatologists have long warned that forest fires, drought and hurricanes are becoming more and more frequent and destructive while the planet heats up mainly due to carbon emissions from fossil fuel.

Kapnick said it was more difficult to determine climate connection with convective storms and future risks because they are more local. Climate models often do not capture weather events on such a granular scale.

Scientific research begins to become stronger. Kapnick quoted a study suggesting that rail are growing due to climate change. However, research continues to connect historical changes in tornadoes in a warming world.

Kapnick said insurance premiums are also increasing quickly in Heartland states because their markets are less regulated compared to places like California, which limits the amount of insurers that can increase rates. National insurers can pool the risks between states and increase the premiums in place with less cost restrictions.

The home insurance crisis should worsen

However, Heller said that it was difficult to capture all the causes and the scale of the home insurance crisis because there is not many data accessible to the public.

The average annual bonuses of its report do not reflect what customers have really paid. His group bought “test quadrants” Quadrant Services, which maintains an up -to -date database of pricing algorithms for most of the country’s main insurance companies.

These test quotes are created by connecting a typical owner to pricing algorithms that insurance companies have deposited with state regulators between December 2021 and August 2024. Heller said that all quotes in his report were based on a consumer with an intermediate level credit rating and a house with a replacement value of $ 350,000.

The Treasury Department and the National Association of Insurance Commissioners in January published an analysis of 246 million insurance policies sold between 2018 and 2022 – the most complete look to date. They found that owners who live in areas with the most expected losses against climate -related disasters paid 82% more for insurance than those with areas with the lowest expected losses. Non -renewable rates were also higher in the risky areas and insurance complaints are frequent in regions affected by forest fires and severe convection storms.

But we do not know if this collection of data will continue, said Heller. Meanwhile, the lifelong insurance crisis will probably worsen as the planet heats up. Since 2013, the United States has recorded 178 $ 1 billion disastersFive times the amount recorded in the 1980s. The growing risks in the event of a disaster led certain insurers to stop selling policies in parts of Florida and California, which will only get worse after forest fires decimated in Los Angeles in January.

The Treasury Department and Naic did not respond to a request for comments.

Kapnick said that insurance companies and decision -makers must find ways to ensure that properties are more resilient in extreme weather conditions to reduce damage.

“One of the easiest indicators of expected loss is, how old is your roof? When was it replaced for the last time?”

Kapnick said insurers could offer owners’ discounts if they invest in resilience and that states can also finance such projects.

Do you have a story to share on home insurance? Contact this journalist at cbedreau@businessinsider.com.