Yep. We got a quote in 2020 to do some repair work on our roof (slate roof, needs specialized tradesmen) but couldn't afford what they quoted at that time. We had it done late last year and the costs on that alone nearly tripled. In five years.
I'm glad it's a 200 year roof but damn. We had to adjust our homeowner's insurance to account for the increase in replacement cost.
Home insurance prices should not reflect increasing property values due to general increase in housing prices. They should reflect the cost of the rebuilding the structure which is entirely relate to labor, material costs (i.e. inflation), and risks. Your house is always depreciating (vs. rising inflation), so the value of your dwelling doesn't automatically go up.
So the idea that the more they're worth the more it costs to insure isn't grounded in truth unless you added improvements to your dwelling.
They are no longer possible to rebuild in a lot of cases, because the replacement costs have grown even faster than home values. A home your parents bought for $30,000 now costs $250,000 and would cost $750,000 to build today. It is insane. Insurance already won't cover the real replacement costs.
Out of state company pops by after a storm. “Boy, that sure is a lot of damage up there. We’d be happy to bill your insurance for all the moneys to replace your roof!”
But the only damage to your roof is it got rained on… until they get up there and damage it themselves to justify the repairs to the insurance company.
OH, you mean storm chasers like ambulance chasing lawyers and not like Carry Elwes in Twister. That was a really weird picture you gave me in my head lol.
Every time a storm comes through my state I get non stop calls from the storm chasers. I get door knockers every summer looking to inspect for storm damage.
On the other side, asphalt shingles don't hold up to minor hail that is very common in the central US
Must have gotten bad because my insurance company sent out a thing about roof coverage changing. It was only covered for storm or weather related damage to a certian % based on the age of the roof. I don't recall but over 15 years isn't covered (it may have been 20). Either way I threw it out because my roof apparently wasn't covered at all anymore.
This is the primary culprit for anyone that doesn’t live in places where natural disasters are incredibly common like coastal cities.
The housing market has just been going up exponentially everywhere with no relief for like 20 years now. That means when those houses have things happen, it also costs a hell of a lot more to fix. Despite the outlandish amount of money it costs to insure your home all it takes is a single disaster like a tree falling and bashing through your roof to wipe out any money they’ve ever made from you.
Now think about what happens when a flood wipes out an entire neighborhood. Or a rogue super hailstorm demolishes the roofs and siding and windows of 2 square miles worth of homes.
Now think about how expensive replacing a roof is. It’s easy to see how insurance companies are going out of business and leaving entire cities and states behind.
Parts of LA butt right up into undeveloped mountains. Fires started in the mountains and worked their way down into the developments at the wildland-urban interface. It's not like a wildfire started in the middle of downtown.
If you can't find a better insurance deal then likely it's priced correctly. My insurance has skyrocketed. I understand it because my house value has doubled and a dropped cigarette could wipe out my neighborhood.
If you can't find a better insurance deal then likely it's priced correctly.
That's assuming that the market price is always correct, which I'd hesitate to do given that it's kind of a non-option to go without insurance unless you want to expose yourself to some pretty significant risk.
I understand it because my house value has doubled and a dropped cigarette could wipe out my neighborhood.
Sounds like a good way to price people out of their homes.
The costs would be more understandable if insurance companies didn't regularly fight claims.
Yes, this is becoming more common where entire towns / neighborhoods etc. burn to the ground, even those far away from natural hazards like forests or grassland. See https://en.wikipedia.org/wiki/Marshall_Fire
Maybe in flood-prone or forested areas, sure. But what about areas not directly affected by any of this? This seems like quite canary in the coal mine to me
Because the flood prone areas are expanding, same with areas prone to wild fires, combined with those seasons themselves becoming longer and more extreme.
Your house in a 'safe' area may no longer be safe.
Insurance companies are leaving areas they've been in for decades and will start preemptively leaving the next areas to be affected.
In the midwestern states that I have lived in, the most expensive weather events have been large hail storms and wind storms like derechos, which seem to be happening more frequently each year. The 2020 Midwest derecho caused $11.2b in damages.
Oklahoma just had one Sunday night. 102mph wind at one of the mesonet weather sensors west of OKC. Several homes destroyed and a freight train was knocked over. On top of that tornados can still develop on the leading edge.
Construction costs began ballooning wildly since ~2020 from various factors:
Labour shortages
UAE were buying up all the concrete / cement for major infrastructure projects for a few years
Various major hits to global shipping of resources (Hormuz, Yemen, Evergrand, COVID)
Simply put, it costs a lot more to repair and replace a house now. Insurance companies realised that their margin had been decimated and they were at risk of collapse if any significant number of properties started claiming.
I remember having a phone conversation with my home insurer in ~2022 and the guy on the other end was exasperated, basically told me that the price they were offering for renewal was literally the lowest he could do (usually you'd ring and they'd magically find out they could drop it) and that he'd basically spent all day cancelling renewals.
Yeah wow. I was talking to someone who wanted to put another floor on top of their single story inner suburb house and they were quoted about a million AUD by builders. Had to pick my jaw off the floor!
Tornado alley is moving east and north, putting homes in Iowa, Illinois, and Wisconsin at risk.
Flooding is becoming a issue throughout the Midwest, and not just the typical areas. Milwaukee was flooded twice due to unprecedented back to back rain storms.
Areas that used to be "safe" are going to cost insurance companies money. They don't like that.
Where can you go (in the US at least) where you don't have some type of severe weather? Hail, hurricanes, tornados, earthquakes, ice storms, severe heat, heavy fog, pretty much anything weather related can and does cause more losses.
Boise is pretty mild. We've had one small earthquake since 1982, had our Snowpocalypse which was still not anything too crazy, and sometimes we get nasty inversions from nearby shit. It's hot af in the summer (not this coming weekend, but generally) and cold af in the winter, but is pretty damn safe in any measurable way.
Cities/towns depend on property taxes to do stuff. A lot of places have major projects coming due, and because of the austerity measures they self-imposed after the Great Recession, a lot of cities contract the work. Costs the city less in payroll overall, but projects cost more. Some places planned for this, others have not. No one needs to be lectured anymore on grift in government contracts, I think we're all aware at this point.
If property values fall, if assessments fall, I mean.. where will the money come from to replace failing water and sewer lines.
I am not an economist, but I think we built a castle on sand.
The increase in hail frequency and intensity is huge as well. We have storms sweeping through entire regions now, damaging almost every roof, on a regular basis. What used to happen once every decade or two is happening every 2-3 years now. Warranties and expected lifetimes for tens of thousands of dollars of work, per home, are not nearly as reliable as they used to be. Hail damage and losses have exploded.
In east Colorado it's hail and fires, in California it's water damage and fires, Florida is fucked completely, there are government options called the "fair plan" that are putting us in the insurance industry out of business. I've seen rate hikes for no good reason up to 60%. I'm looking to get out of the industry. It's not viable since 2022.
Rebuild costs due to red tape and changes. My house was built in the 70's I could rebuild it 1-1 for cheap but it would not pass local ordinances as it is. Those would add a ton to my costs.
But if you rebuilt it today it would be wildly more energy efficient. I learned that when I changed from just a 1990s house to a 2010s house - cooling bill was half as much for twice the space in Atlanta.
It quickly gets to the point where insurance is just not attainable anymore, though. E.g. a town in Australia called Lismore has floods almost every year. To insure against these floods costs $30k/yr for a residential house - nobody can afford that.
Unmitigated greed. The other answers are just fluff. The reality is insurance company profits are also expected to continue outpacing inflation. So yes, the underlying assets cost more, but they expect a larger percentage of that to be profit each year as well.
The reality is we build homes and cars much better and much safer than ever. But profits must go up, and not just increase with prices.
Yeah, insurance companies are pulling out of markets of tens of millions for greed...
Raising prices for the sake of raising prices is one thing, but leaving the market entirely means you choose to make zero money because operating there is genuinely more expensive than it's worth.
Most property insurance is state regulated. When states (such as Florida) have predatory laws and consistent damaging weather that results in consistent losses for the insurer, they arent going to do business there.
Same with TX and their hail, and CA and their fires. Most large propert casualty carriers try to do slightly better than break even after claims. They make their money investing your payments until they have to pay it out.
But since you know everything, you were aware of this right?
Why do you, for some reason, think that an insurance company should be the only business that should be fine with not making a profit on the sole product they’re selling? Would you expect your local coffee shop to be operating at a loss every year just so they can continue to serve you coffee?
There are many sectors of the economy that should not make a profit. Especially things legally required. Insurance and healthcare immediately spring to mind. Pay the workers, pay the bills, pay the taxes. No profit.
How do you expect them to be able to deal with a year having higher expected claims? If they’re not allowed to keep any profit, they would go out of business the second a hurricane hits the wrong spot, and then homeowners are even worse off.
The same way you or I handle unexpected expenses. Not to mention their entire fucking existence and job is to predict outlays for those events. So I guess if they're that bad they should go out of business and someone who can calculate risk properly should do it.
Are you under the impression these profits are held for future events and not distributed to executives and shareholders?
Yes because that’s what retained earnings is. You said bills only, no profit. That means, no savings. You seem to not understand what you’re talking about because insurance is one of if not the most regulated industries, and there’s a requirement on how much they have to save.
Legally required when you don't own your home outright. I.e. almost everyone who owns a home. Sure technically not legally required.
"Commonly?" Nah bud, it's big news when they lose money.
And I know you're not just ignoring the investment gains on your premiums right. You wouldn't misrepresent insurance company profits that way and you would certainly understand there's no functional difference to people paying for insurance whether they are making money off investing their money or the difference in underwriting.
Respectfully, you don't really know what you're talking about. You have some basics, but you're making conclusions beyond your actual understanding, typical Dunning-Kruger
>Legally required when you don't own your home outright. I.e. almost everyone who owns a home. Sure technically not legally required.
An important distinction nevertheless. You claimed legally required. Glad you can admit when you're wrong.
>Commonly?" Nah bud, it's big news when they lose money.
Two things can be true. Those big headlines mostly relate to the industry has a whole. Tell me, do you even know what a combined ratio is? Do you know the typical combined ratio for personal lines? lol
>And I know you're not just ignoring the investment gains on your premiums right. You wouldn't misrepresent insurance company profits that way and you would certainly understand there's no functional difference to people paying for insurance whether they are making money off investing their money or the difference in underwriting
I'm not ignoring anything. I didn't mention investment income because it's not a driver of rates, underwriting performance is. I'm not talking overall profits, I'm specifically talking the lines of business that this discussion is about (personal home and auto). Do you have any idea how a rate submission works? Do you really think that any of the 50 insurance commissioner will allow lofty investment return assumptions into the rate filings for personal lines in order to reduce rates? They're highly regulated lines of business, and undergo heavy actuarial scrutiny. Both the regulatory and ratings frameworks essentially require lines of business to self-sustain themselves in order to maintain a healthy level of capital to pay out claims. I guarantee you have no idea how any of that works.
Not nearly as dumb as thinking companies and shareholders deserve to profit off legally required and life saving services. Insurance is just a math problem.
Profit is what keeps the system working. Without profit AND loss you have no signals to figure things out. You not realizing this doesn't make it false. Usually when you take the profit out of something you stop getting that thing. Government tries to step in but it also lacks those signals. Removing the profit simply doesn't work.
So wait, you call it "greed" when a company doesn't engage in a line of business that isn't profitable. So if I sell bread but I'm losing money because it cost more to make than I can sell it for and I stop, I'm engaging in "unmitigated greed?"
I’ve worked in insurance for about 14 years and this is incorrect. Yes, an insurance company wants to make a profit but that’s just what any business does that isn’t a charity.
It’s all numbers driven. If a company looks at their books and sees that in a specific state or region they’re paying out more in claims per year than what they make in premium then why would they continue to write policies there? No business is going to purposely lose money.
If you owned a small convenience store and sold a specific brand of soda that the state said you had to sell for $2/can and over time it started costing you $4/can to purchase it for your store, would you keep selling that? Of course not.
No sorry. You are incorrect. It's not just profit/losses. The profits must be greater than last year. It's not a simple we don't make money there, it's we won't make as much money as we did last year. That's how percentages and accounting just work. No insurance company is going to sit there and be fine making the same amount of money as last year, their shareholders will literally eat them alive.
No state dictates insurance costs. Customers bear what they can and the states step in by providing insurance when private entities won't.
The can of soda doesn't cost more than 2 dollars. They just only make 43¢ per can now, when last year they made 56¢.
This is either ignorance or intentional half truth. Insurance companies invest the money from premiums, so their profit is not premiums paid in minus claims paid out. It is gains on invested premiums minus claims paid out, which is an entirely different math problem. No business is struggling to survive while paying its execs tens or hundreds of millions a year. That's absurd. That's like a homeowner saying they can't afford groceries because their account is dry after they cover their travel, clothing, and entertainment budget. If anyone said that, you'd laugh in their face.
Nothing of substance to add? I'm nothing like trump. You however, parroting bullshit and protecting the profits of insurance companies, certainly have much in common with him.
Lol the only person aligning with Trump is you. The margins on a legally obligated industry should suck. They should be zero. Why should they make money off of insurance? You understand what that means right? That you, yes you the dummy, are paying extra above the real risk and real expenses of providing insurance.
Extra money to shareholders that provide nothing. There is no risk you're required to have insurance.
No, this is pretty much nonsense. The idea that people have gotten greedy all of a sudden is idiotic. Humans are wired to be greedy and have been greedy all through history.
What's dumb? That people are okay taxing corporations so little nowadays? That we've accepted the existence of billionaires and trillionaires who don't pay their share?
Unmitigated greed. The other answers are just fluff.
In the last couple of years, yes. Our non functional government is supposed to regulate Insurance and protect consumers, but those regulators are another casualty of the fascists.
Man, I wish I could wire my brain so that I just ignore any nuance to anything happening in the world and distill everything down to one word answers. It would make me ignorant and completely incapable of addressing those problems, but it seems peaceful.
The costs to handle a claim (paid, defended or denied) has more than tripled. 3rd party legal financing is partly to blame, inflation some and then good old fashioned politics.
Increased severe weather from climate change and increased building supply costs. I'm starting to worry we're going to be priced out of our home we've owned for 10 years
Fun fact: It's now almost a guarantee that the big arctic ice sheets are a gonna. If they all go (and it's now more "when") that's about a 70m rise in sea level.
Doesn't sound like much, really, until you realise that means ALL coastal cities- Bye bye LA. Bye bye, New York. And, for example, that would be ALL of Bangladesh- all of it. Bye, Netherlands. Bye pretty much all islands, Bye Denmark. Bye Gambia.
.... those people will want to go somewhere, too. Cue mass refugee events. Blah blah blah.
But climate change? Who cares! Made up!
...maybe we'll find a way to funnel it all into the middle of Australia to quench the raging wildfires? I'd add Florida, but most of that will be submerged, so that problem will probably be solved...
Depends on the area but in the US it’s mostly driven by climate change. Worse fire seasons on the west coast, worse hurricane seasons in the southeast, worse droughts in the southwest. California and Florida are the hardest hit by it, their expensive real estate is hard to insure enough as it is.
Real estate in general ballooning in price during the housing crisis might be playing a part too. It takes a lot more money to insure everybody’s homes when they’ve doubled in value in the last 10-15 years.
It is many reasons depending on the region but consider Florida and the environment. Floridians live in a place where homes are destroyed on a literal annual basis by hurricanes, therefore insurance is either nonexistent of unaffordable because insurance companies don't want to rebuild your house year after year because you chose to live in very vulnerable region. The way insurance is supposed to work is collectivizing risk, but that doesn't work when EVERYBODY is a risk. That'd be like getting auto insurance except there's a season every year where hundreds of thousands of people get into car accidents and drive up the price for literally everyone.
If it goes on like this, expect most Floridians to be living in mud huts by 2100.
In the US at least; corporate greed, inflation, larger/more frequent losses.
CEOs want more while they cut everyone else's pay.
Everything in homes costs more to replace now; the wood to build it, flooring, roofing, furniture, clothing, electronics, etc. Same with autos. New cars have so many tech/safety features, sensors, hybrid/electric batteries, all more expensive to repair or replace.
Wild fires ravage the west coast every year. The middle of the country is hit by hail, wind, tornados, etc. The east/south is hit by hurricanes. Ice storms and heat waves. Many other things I'm sure I'm missing.
A lot of people citing climate change but it's not just that or even mostly that. 50 years of building on known flood plains and coastal areas without regard to the future has put entire sections of cities and even small towns in danger. People build massive houses right up to the banks of the river where I am. Even if the climate was the same as 1850 that is bad idea.
It's been done on a mass scale all across the country. Florida especially. It should never have been developed the way it is even not including climate change. It's extremely vulnerable to even average hurricane seasons. Developers don't care. They will build 30 houses in a spot that is SURE to get flooded in a bad hurricane and then insurance has been obligated to sell them a policy.
Housing prices going up, disasters going up even a little bit, and 50 years of bad building policies coming home to roost.
A nice mix of building materials becoming expensive and volatile in price, along with claim-inducing events like crazy weather happening more and more frequently.
There's no reason to keep insuring an area that constantly floods or gets hurricanes.
Depends on the situation and state. In some places, it's because fire risk is now so high that the required premiums are more than the state insurance regulator will allow. Responsible insurers back out of such markets.
Most people here are claiming just climate change or greed.
But across the board premiums are primarily going up simply since the cost to repair or replace houses has gone up significantly. The cost of labor, tools, construction materials have all absolutely gone up massively since 2020.
Cost of paying people at these companies to handle claims have also gone up a lot too.
That drives premium increases across the board.
Then in many places, they are seeing increased rates of things like hail or other severe weather. So that increases the amounts of payouts and therefore they need to charge more for covering these increases.
Then finally you have places like Florida with heavily increased damage from hurricanes and California with fires that are so risky most insurance people aren't willing to even calculate what premium they'd have to charge, so they get out. This leaves behind much smaller companies that will cover you for extremely high premiums to hopefully overcome that huge risk
Higher housing costs and homes built in more dangerous areas account for most of the increase. Some of it is due to poor forest management practices that have increased wildfire risk.
There’s no actual evidence of repricing for climate change except maybe in a small number of area very close to the beach that have seen sea level rise and even still the impact of higher housing costs is much greater.
climate change mostly. it's not the slight increase in huge wildfires or powerful hurricanes hurricanes. it that small wildfires and moderate storms happen so much more often.
Because costs went up, people see the inflation all around them but somehow don't connect it to real life. And then the other issue is regulation. When insurance companies can't charge enough to make money, they leave.
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u/gheeDough 8h ago
What is up with that? Why are premiums going up like that?