It’s hurricane season. Good luck getting affordable homeowners’ insurance | CNN Business (2024)

It’s hurricane season. Good luck getting affordable homeowners’ insurance | CNN Business (1)

Homes in Napa, California, on May 6. Beginning in July, State Farm General said it would not renew homeowners insurance for 72,000 California residents.


June 1 marks the official start of hurricane season in the Atlantic Ocean, and meteorologists predict it will be “extremely active,” with the potential for sevenmajor hurricanes– the most destructive categories.

And as insurance companies struggle to stay afloat, battered by elevated inflation and the growing frequency of catastrophic storms made worse by climate change, it’s become even tougher for homeowners to find affordable insurance options.

Just last year, rates jumped 11.3% nationwide, according to S&P Global, and experts don’t expect a reprieve this year.

And while there are ways to try and save money on insurance costs, moving to a state with minimal hurricane risk isn’t going to be enough anymore. States like Arizona, Illinois and Utah, which aren’t generally considered at risk from hurricane damage, have seen increases that far outpaced the national average last year.

What’s behind insurance price hikes?

For decades, homeowners insurance was considered a very stable line of business for insurance companies, said Chuck Nyce, a professor of risk management and insurance at Florida State University.

Most claims involved events affecting a single home, like an electrical fire or a washing machine leak.

But more recently, there has been an uptick in catastrophic hurricanes, wildfiresand convective storms – like severe thunderstorms and tornadoes,Nyce said.

It’s hurricane season. Good luck getting affordable homeowners’ insurance | CNN Business (2)

Volunteers from Samaritan's Purse help a daughter search for family items in the rubble of her mother's wildfire-damaged home on October 09, 2023, in Lahaina, Hawaii. Insured losses totaled $61.5 billion from the Hawaiian fire and convective storms during the year, according an estimate from the management consulting firm Aon.

“These storms don’t only affect one property at a time. They affect a large number of properties,” he said. “That changes the dynamic for an insurance company.”

And unlike hurricanes and wildfires, severe convective storms are hitting states that were once considered relatively “safe” from most natural disasters, driving up insurance costs.

Last year was the worst year for the homeowners insurance industry in over a decade, according to a May report from S&P Global.

BARTOW, FLORIDA - SEPTEMBER 29: Talukder Mahtab surveys the roof of his business after it was hit by the winds and rain from Hurricane Ian on September 29, 2022 in Bartow, Florida. The hurricane brought high winds, storm surge,s and rain to the area causing severe damage. (Photo by Gerardo Mora/Getty Images) Gerardo Mora/Getty Images Related article Florida’s homeowner insurance rates are four times the national average. That’s not getting better anytime soon

“Inflationary pressures, a devastating wildfire in Hawaii and a record-breaking number of billion-dollar loss events from convective storms weighed on the industry’s results in 2023,” the report said.

The US homeowners insurance industry saw net losses jump to $101.29 billion in 2023, according to the report. Only two of the 20 largest US homeowners’ insurance companies were profitable last year.

And today’s elevated inflaton means that when property gets damaged, it costs insurance companies significantly more to make repairs compared to a few years ago, said Lynne McChristian, the director of the office of risk management and insurance research at the University of Illinois at Urbana-Champaign.

“The thing that many people don’t realize is what you pay for property insurance is based on the rebuilding cost of your home, not the real estate value,” she said. “Understand that the price you pay for insurance is sending you a signal.” The higher the premiums, the more likely the area you live in is at risk, she said.

What happens if I can’t get insurance?

As insurance companies struggle to make a profit, policyholders lose out, as well. Some are subject to rate increases, while others are losing their coverage altogether.

Florida and California have been hit particularly hard by this phenomenon. Many national insurers have withdrawn property coverage from those states due to elevated risks of hurricanes and wildfires, respectively. But the issue is spreading: states like Louisiana, North Carolina and Texas are seeing insurers head for the exits, as well.

It’s hurricane season. Good luck getting affordable homeowners’ insurance | CNN Business (4)

A house is damaged by a tree after a severe storm in Houston, on May 18. Texas homeowners saw their insurance rates rise by more than 23% in 2023, according to S&P Global.

While property insurance is not mandated by law, most lenders require it for mortgage holders. That can leave many homeowners carrying mortgages scrambling if they are unexpectedly dropped from their insurance.

Most states have something called an “insurer of last resort,” which is a state government-backed insurance provider designed to fill coverage gaps in the private insurance market.

These state-backed insurance plans vary by state, but they can be costly or provide less coverage, said Nyce.

Still, these government-backed insurance companies have ballooned in popularity as some homeowners run out of options. Last year, Florida’s state-backed Citizens Property Insurance Corp. became the 10th largest homeowners’ insurer in the US, S&P Global said.

How to lower insurance costs

For those who still have insurance options in their area but are worried about increased costs, there are some simple ways to lower your insurance costs.

Nyce said it’s important to shop around every couple of years to see if other companies are offering more competitive rates.

“Some insurance companies may be looking to add business in your area. They may be willing to sell something at a lower rate to gain market share,” he said.

Raising your deductible, the amount of money a person must pay before your insurance kicks in, could also help lower premiums, if you can afford it, Nyce said.

But another way to protect yourself is to shell out money now to “harden” your home in order to avoid high insurance costs when the next disaster strikes. That can mean investing in ways to fortify your home’s structure, like metal straps that attach your roof to a home’s walls and wind-resistant garage doors, said Aris Papadopoulos, who works at Florida International University’s Extreme Events Institute.

“We all love to have a pretty kitchen, pretty closets and bathrooms, but before you do any of that, make sure your house is strong,” he said.

CNN’s Chris Isidore contributed reporting.

It’s hurricane season. Good luck getting affordable homeowners’ insurance | CNN Business (2024)


Is it worth getting hurricane insurance? ›

If you live in a hurricane-prone area, it's a good idea to get enough coverage to pay for completely rebuilding your home. Hurricanes can cause devastating damage, and a standard home insurance policy won't always cover all the damage.

Does homeowners insurance protect against hurricanes? ›

Most property insurance covers wind-related damages from hurricanes under the broader category of “windstorm.” Wind coverage may be excluded if you live in a coastal area at high-risk for tropical storms and hurricanes. Standard insurance policies do not cover flooding, including storm surge flooding.

Do insurance companies offer hurricane insurance in Florida? ›

Getting covered for hurricane damage is usually part of your insurance policy, regardless of the type of policy you have. Standard Florida homeowners insurance policies cover windstorms, so damage caused by hurricane winds is typically included. Policies that don't cover hurricanes or wind are called x-wind policies.

Why is homeowners insurance getting so expensive in Florida? ›

Three primary factors are driving the insurance challenge. First, natural disasters are becoming more common and costly. Second, the price of reinsurance is skyrocketing. And finally, Florida's litigation-friendly environment compounds the issue by making it easy for customers to sue their insurers.

Can an insurance company drop you during hurricane season? ›

According to insurance adjuster Art Jansen, insurers canceling policies in high-risk areas is legal and not uncommon.

What is the average deductible for hurricane insurance? ›

The typical hurricane deductible is 1% to 5% of the home's insured value, although policies in some vulnerable coastal areas could have an even higher deductible.

Do citizens residential insurance policies have a deductible for hurricane coverage? ›

The Hurricane deductible is generally a higher dollar amount than other policy deductibles and is based on a percentage of your Coverage A. Homes with Coverage A limits less than $100,000 may have a set dollar amount Hurricane deductible. The Hurricane deductible is applied on a calendar-year basis.

Does FEMA offer hurricane insurance? ›

FEMA assistance is not the same as insurance. Assistance only provides the basic needs for a home to be safe, sanitary and secure. Home damage must be related to the April 13 storms. FEMA inspectors may contact survivors who registered for help to conduct a virtual inspection and calculate losses.

What is not protected by most homeowners insurance? ›

Termites and insect damage, bird or rodent damage, rust, rot, mold, and general wear and tear are not covered. Damage caused by smog or smoke from industrial or agricultural operations is also not covered. If something is poorly made or has a hidden defect, this is generally excluded and won't be covered.

How long does an insurance company have to settle a hurricane claim in Florida? ›

If your property was damaged by a hurricane in Florida and you submit a claim for damages to your insurance company, they must respond to your claim within 14 days and they must either deny, fully pay, or partially pay the claim within 90 days.

Does Allstate have a hurricane deductible? ›

If your policy does offer coverage for wind damage, you may find that it includes a separate hurricane deductible that is higher than your standard deductible, according to the Insurance Information Institute (III).

What is the highest deductible for homeowners insurance in Florida? ›

Homeowners insurance policies in Florida usually carry a deductible of either $500, $1,000, $2,500, $5,000 or in the case of a hurricane, the deductible would likely be a percentage of the policy limit.

What five insurance companies are pulling out of Florida? ›

What insurance companies are pulling out of Florida?
  • American Capital Assurance Corporation.
  • Avatar Property and Casualty Insurance Company.
  • FedNat Insurance Company.
  • Florida Specialty Insurance Company.
  • Guarantee Insurance Company.
  • Gulfstream Property and Casualty Insurance Company.
  • Physicians United Plan, Inc.
Jul 12, 2023

What is the average monthly cost of homeowners insurance in Florida? ›

How much does homeowners insurance cost in Florida? The average cost of homeowners insurance in Florida is $2,625 per year, or about $219 per month. That's 37% more than the national average of $1,915. In most U.S. states, including Florida, many insurers use your credit-based insurance score to help set rates.

Are people leaving Florida because of homeowners insurance? ›

Priced Out: 1 in 3 Floridians who get dropped by their homeowner's insurance company are choosing to move: study finds. JACKSONVILLE, Fla. – One in three Floridians who get dropped by their homeowner's insurance company have moved or plan to move somewhere else.

Why is hurricane insurance so expensive? ›

Location. Homes in high-risk areas typically have higher premiums. Insurance companies assess the risk associated with your area by looking at the likelihood of severe weather, such as floods, wildfires, and hurricanes, local crime rates, and your home's proximity to a fire station.

How much do hurricane windows save on insurance? ›

In Florida, wind mitigation insurance credits are available to homeowners who replace all glazed openings with impact-resistant windows and doors, which can result in up to 30% of wind load policy savings each year.

Is it really worth it to get insurance? ›

In general, life insurance is worth it if your death would place a financial burden on other people. Consider getting coverage if: You want to cover your own burial costs. Funerals can be pricey and your loved ones may not have the cash to cover the bill.

How do I prepare for hurricane insurance? ›

Call your insurance company or agent and ask for an insurance check-up to make sure you have enough homeowners insurance to repair or even replace your home. Don't forget coverage for your car or boat. Remember, standard homeowners insurance doesn't cover flooding.


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