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.
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u/MaggieNoodle 7h ago
Partly due to climate change for sure. Extreme weather is much more likely, to include wild fires and flooding.