Home Insurance Increases

[WinnisquamZ]

Just got our home insurance renewal. A 29% increase over last year. No claims over the past 35 years. Anyone else seeing this large of an increase?


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[John Mercier]

Yeah. I saw mine in April.
But my valuation also went nuts.
So not sure if that is driving it or what.

[Descant]

Most home policies are automatically increased by 3-4% each year to cover inflated building costs. This may not be accurate if you let the add-ons compound. Good to do a new evaluator with your carrier/agent to
get the base amount on the dwelling OK. It may be time for a bigger deductible if you haven't had a claim in 35 years. (35 years ago $100 was common. Now, maybe $2500?) I never take the service program for appliances and I always take big deductibles. I think I save more each year than the cost if I have a small loss or need a new stove.

[FlyingScot]

It could be a lot worse--very grim situation for the entire home insurance market. This is definitely going to impinge on home values and simultaneously make it more difficult to buy. NH is great shape compared to others

https://www.nytimes.com/interactive/...e-weather.html

[Mr. V]

Originally Posted by FlyingScot

It could be a lot worse--very grim situation for the entire home insurance market. This is definitely going to impinge on home values and simultaneously make it more difficult to buy. NH is great shape compared to others

https://www.nytimes.com/interactive/...e-weather.html

Please do not post links that are behind a pay wall ... very frustration for those of us who haven't subscribed to NYT.

[SAB1]

Yup. My renewal last year was 30%. Sadly we are being gouged for the hurricane losses down south.

[Major]

This is a natural consequence of inflation. Everything else is 30% or more expensive than it was before we destroyed our energy position. Unfortunately, we are only experiencing the tip of the iceberg. Things are going to get progressively worse unless we change our economic policies.


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[Biggd]

Originally Posted by WinnisquamZ

Just got our home insurance renewal. A 29% increase over last year. No claims over the past 35 years. Anyone else seeing this large of an increase?


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Yes, ridiculous!
I own 2 homes and 2 commercial properties; the commercial properties went up 33%!
My agent says she has never seen anything like this in all her years in the business.
We are all paying for the losses from the natural disasters around the country.
Lots off cancelation notices going out to property owners also. They are using google maps to weed out properties that are high risk.

[MeredithMan]

...our premium went up drastically as well, also with no claims filed. When I asked the agent, she stated that "full replacement value" policies were seeing the biggest increases due to the increased cost to replace the home as is.

[John Mercier]

Originally Posted by Major

This is a natural consequence of inflation. Everything else is 30% or more expensive than it was before we destroyed our energy position. Unfortunately, we are only experiencing the tip of the iceberg. Things are going to get progressively worse unless we change our economic policies.


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Our energy position? We have record net exports in every category except coal. Coal net exports have yet to return to 2012 levels, but that is world demand... not something the US can control.

Our inflation is due to higher labor costs resulting from a smaller workforce... we pay a lot more for trades people... and higher quality/design on the materials side.

We know how to keep housing costs down... we just don't want to.

[gillygirl]

During my 4 years in FL, my insurance went from $1000 to $4000. I sold my house 4 days before I paid that last one. After the condo collapse in Surfside and Hurricane Ian, the association insurance at my boss’s community went up 81%. The community I managed was projected to increase 57%. There is a limit on how much association fees can increase, but reserves and insurance are excluded from that calculation.


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[Major]

Originally Posted by John Mercier

Our energy position? We have record net exports in every category except coal. Coal net exports have yet to return to 2012 levels, but that is world demand... not something the US can control.

Our inflation is due to higher labor costs resulting from a smaller workforce... we pay a lot more for trades people... and higher quality/design on the materials side.

We know how to keep housing costs down... we just don't want to.

That was a polite way of saying that the economic policies implemented by the present administration during their first week in office caused the spike in fuel prices, essentially more than doubling fuel costs during the immediate time frame. This spike caused the inflation that we are now living with, even though fuel is still 50% ($2.40/gallon on January 20, 2021 vs. $3.62/gallon today). If you don't believe a 50% plus increase in the cost of fuel caused the inflation that we see today, I have a bridge to sell you. It has nothing to do with labor.

[John Mercier]

The inflation is too much demand on labor, and not enough customer efficiency.
I live with it every day.

We can't find employees... and the customers will not change their pattern to be more efficient. In fact, they have chosen to be less efficient.

That causes more need for labor... and as the demand on labor increases... labor inflation takes hold.

Hence why large FED interest rate increases have not even created a dent.

[Major]

Originally Posted by John Mercier

The inflation is too much demand on labor, and not enough customer efficiency.
I live with it every day.

We can't find employees... and the customers will not change their pattern to be more efficient. In fact, they have chosen to be less efficient.

That causes more need for labor... and as the demand on labor increases... labor inflation takes hold.

Hence why large FED interest rate increases have not even created a dent.

I disagree. Increases in the cost of labor is a result of high energy costs, which increased the costs of everyday goods. The high energy costs were the genesis of the inflation, not labor shortage, which we were dealing with prior to January 2020.

[WinnisquamZ]

After conversations with a few individuals in the insurance industry I was awakened to the fact that one’s credit rating is factored into rates. And over the past few years it has weighed more. Personally, mine has declined because I don’t have a mortgage or car payments. And carry little CC debt. Crazy world we live in


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[Major]

Originally Posted by WinnisquamZ

After conversations with a few individuals in the insurance industry I was awakened to the fact that one’s credit rating is factored into rates. And over the past few years it has weighed more. Personally, mine has declined because I don’t have a mortgage or car payments. And carry little CC debt. Crazy world we live in


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Great point. The fact that one's credit score depends on the amount one borrows is ludicrous! When we paid off our home, and at the time we had no debt, our credit scores plummeted. We now buy a vehicle on credit even though we don't have to. It went up immediate. Dave Ramsay has been ranting about the backward system for a long time, but no one seems to hear.

[John Mercier]

Originally Posted by Major

I disagree. Increases in the cost of labor is a result of high energy costs, which increased the costs of everyday goods. The high energy costs were the genesis of the inflation, not labor shortage, which we were dealing with prior to January 2020.

I paid more for gasoliine and pre-buy heating oil in the summer of 2008.
I currently make more than double the wage for roughly the same work.

I use less gasoline now than then (more efficient vehicle) and less heating oil (improvements in my home).

All the local lumber yards have been in hire mode for months...
We acquire employees from each other, and sometimes from our contractors (which unfortunately hurts the contractors).

Even our vendors in other parts of the country are experiencing the same thing... window demand is so high that what used to be a four to six week lead time is now in some cases more than twelve weeks. By raising the prices, they can afford the higher cost of acquiring labor... and we thought... slow the demand. Demand doesn't seem to be slowing...

High energy prices would show up in activities that require lots of energy being avoided... so high gasoline should show up as less vehicle travel and less boating.

We just are not seeing it happen.

As for policy, record setting net exports last year for 1.6 million barrels per day of oil and over 20 million cubic feet per day of natural gas... even coal was a net export with over 80 million short tons for the year, though not as high as in 2012.

Good investors know the numbers...
They also pay attention to productivity enhancing technology and seek out management teams that know how to use it.
Those companies lead the future because the ROI will be higher per employee.

[John Mercier]

Originally Posted by WinnisquamZ

After conversations with a few individuals in the insurance industry I was awakened to the fact that one’s credit rating is factored into rates. And over the past few years it has weighed more. Personally, mine has declined because I don’t have a mortgage or car payments. And carry little CC debt. Crazy world we live in


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I don't have a mortgage, vehicle payment, and carry no cc debt.
My score has never fallen below 800.

[Biggd]

Originally Posted by John Mercier

Our energy position? We have record net exports in every category except coal. Coal net exports have yet to return to 2012 levels, but that is world demand... not something the US can control.

Our inflation is due to higher labor costs resulting from a smaller workforce... we pay a lot more for trades people... and higher quality/design on the materials side.

We know how to keep housing costs down... we just don't want to.

He tries to turn every thread into a political one!

[Major]

Sorry John, I just don't buy it. You can obfuscate the issue with a lot of words and statistics adjacent to the issue, but the bottom line is that inflation was at 1.4% in January 2020, and after a dramatic increase in fuel costs, spiked to 9+% (probably a lot more than that since key indicators are not included). The inflation was caused by the amount it cost to manufacture and transport goods. The abandonment of our energy independence and the printing of money are the prime drivers of inflation.

[ishoot308]

Originally Posted by WinnisquamZ

After conversations with a few individuals in the insurance industry I was awakened to the fact that one’s credit rating is factored into rates. And over the past few years it has weighed more. Personally, mine has declined because I don’t have a mortgage or car payments. And carry little CC debt. Crazy world we live in


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This is very true! I follow my score on Experian religiously just for the heck of it. I have no mortgage, loans and no credit card debt. On the 4th of every month my credit score is reviewed. If I carry debt on a major purchase on my cc which I do sometimes for the points, my credit score goes up. If my credit card has no debt my score goes down. This happens like clockwork every month. There is no doubt about this!!

Dan

[tis]

Originally Posted by Major

Sorry John, I just don't buy it. You can obfuscate the issue with a lot of words and statistics adjacent to the issue, but the bottom line is that inflation was at 1.4% in January 2020, and after a dramatic increase in fuel costs, spiked to 9+% (probably a lot more than that since key indicators are not included). The inflation was caused by the amount it cost to manufacture and transport goods. The abandonment of our energy independence and the printing of money are the prime drivers of inflation.

I totally agree with you. It was like somebody turned off the switch.

[John Mercier]

If it is political, then a waste of time.

If people are serious... the inflation is due to the need to pay much higher wages.

Prices rise when demand is strong...

[FlyingScot]

Originally Posted by WinnisquamZ

After conversations with a few individuals in the insurance industry I was awakened to the fact that one’s credit rating is factored into rates. And over the past few years it has weighed more. Personally, mine has declined because I don’t have a mortgage or car payments. And carry little CC debt. Crazy world we live in


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I am in the same situation with respect to credit, but the negative impact on my score is relatively small, too small to account for your increase

[FlyingScot]

Originally Posted by Mr. V

Please do not post links that are behind a pay wall ... very frustration for those of us who haven't subscribed to NYT.

Sorry, I thought everyone got a few free articles/month. If you Google weather impact on home insurance claims, I expect you'll get plenty.

The gist of the article is that the extreme weather of the past few years has led to big increases in claims, driving up rates, and causing many insurers to exit certain states. This is in addition to sea level rise. NH is one of the few states that appear consistently profitable for home insurance.

Although the article did not go into detail on long term economic impacts, it's easy to see this being catastrophic for the economy as a whole, or at lest in certain geographies. If a person cannot insure their home, that sort of means that cannot afford to live in it...

[Major]

Extreme weather and rising seas are not the reasons why insurers are raising rates and exiting certain areas. Statistically speaking, "extreme weather" events are less now than 30 years ago. Interesting, the most number of "extreme weather" events occurred in the late 1800s (between 1870 and 1900; however, they were not nearly as devastating for the reasons noted below). As far as rising seas, given that the world's elites are gobbling up oceanfront property, it is hard to see this as being a real concern.

In my discussions with an insurance expert, what has caused increased rates and exiting are 1) the density of population where these weather events tend to occur, 2) the increase value of properties in such areas, and 3) the costs of replacement, which have grown exponentially in the last 3+ years. For example, over the past 30 years, Florida's population has grown from 13,000,000 (1990) to 22,610,000 (2023), a 70+ % increase. As we know, and have known for a long time, hurricanes tend to hit Florida especially hard. Other southern states have grown as well. The quality and costs of homes in these areas has increased over that span too. Florida, for example, has an unbelievable number of high-end homes a/k/a mansions. And finally, as noted in this thread, construction costs have skyrocketed during that time.

Some people believe in "extreme weather" but it's not a real thing.

[thinkxingu]

Originally Posted by Major

Extreme weather and rising seas are not the reasons why insurers are raising rates and exiting certain areas. Statistically speaking, "extreme weather" events are less now than 30 years ago. Interesting, the most number of "extreme weather" events occurred in the late 1800s (between 1870 and 1900; however, they were not nearly as devastating for the reasons noted below). As far as rising seas, given that the world's elites are gobbling up oceanfront property, it is hard to see this as being a real concern.

In my discussions with an insurance expert, what has caused increased rates and exiting are 1) the density of population where these weather events tend to occur, 2) the increase value of properties in such areas, and 3) the costs of replacement, which have grown exponentially in the last 3+ years. For example, over the past 30 years, Florida's population has grown from 13,000,000 (1990) to 22,610,000 (2023), a 70+ % increase. As we know, and have known for a long time, hurricanes tend to hit Florida especially hard. Other southern states have grown as well. The quality and costs of homes in these areas has increased over that span too. Florida, for example, has an unbelievable number of high-end homes a/k/a mansions. And finally, as noted in this thread, construction costs have skyrocketed during that time.

Some people believe in "extreme weather" but it's not a real thing.

Literally every single article I've ever read about insurance costs going up in Florida mentions weather and, as in this case—which is from Insurance Business Magazine—"extreme weather" events.

The issue in NH, of course, is less weather and more inflation/rebuilding and material costs, but, even then, there's clearly been more storm damage with all the rains we've had. I mean, whole towns in Vermont were shut down and Alton was an island for a few days last year, right?!



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[John Mercier]

It isn't even really material costs. Base material costs are pretty much universal. Base material costs have increased due to the demand on the system... but even a great deal portion of that has been labor costs.

A basic site built home in the area would cost around $400 per foot is the estimate. A basic factory built modular around $300. A basic factory built manufactured probably $100.

The site built uses local labor, the modular uses structured labor, and the manufactured uses structured labor in a lower cost labor market.

The labor plays the significant role.

A lower replacement value means a lower insurance cost.
Then they factor into the ''extreme weather event'' to determine how often they may have to pay out... even at that lower replacement cost.

[tis]

You forgot to add the cost of government regulations which I read in a trade magazine a few years ago was almost a third or almost $100,000 on a $300,000 house. Course it's hard to build a house for that anymore. This was according to the Builder's Assn.

[hilltopper]

After 17 claimless years my insurance company started coming up with ridiculous items I needed to fix on my property or they would drop me. I was forced to cancel the insurance before they dropped me and I had a cancellation notice attached to my name. I probably should have dropped them awhile ago as the insurance I picked up is (for now anyway) a lot less per month than I was paying.

[upthesaukee]

Insurance covers the losses of a "few" by the "many".

Back in the 1980s and 1990s, I worked for an insurance company branch office in Upstate NY that had branches nationwide.

In August of 1992, category 5 hurricane Andrew hit the Bahamas, Florida, and then continued through the Gulf of Mexico to Louisiana. My company had a branch office in Melbourne FL with around 90% of their business in the area around Miami and just south of Miami, including Homestead FL. The damage was catastrophic.

In the end, the losses incurred were outweighed tremendously by the cost to repair and replace, even with the reinsurance (catastrophic loss insurance) that we had. The end result was that the branches nationwide could not cover the damages incurred in FL and the resulting premium increases made the cost of our insurance totally uncompetitive. In the end, our company went out of business.

The point is that our homeowner rates increase not only because of the cost to repair covered losses, but also what has to be repaired due to uncovered losses, not the least of which is flood damage. Couple this with the severe weather we have seen over the past few years due to wind damage, snow and ice damage, etc. and the rates have been increased dramatically. Combined with the cost of materials and labor, the rates must be increased to keep pace.

Dave

[tis]

It is definitely getting to be a real problem for people. Auto insurance too. I will not be surprised if people who can (not required by bank or other) will decide not to carry it because they can't afford it.

[Major]

Thinkxingu, I believe it all depends on where you get your news. I am probably correct that you and I get our news from different sources. That said, I've read many articles stating that the number of "extreme weather" events is actually less now than 30 years ago. Statistically speaking, "extreme weather" is not a thing. I think "extreme weather" is an extension of climate change promoted by the alarmists. To me, it's just weather.

However, not all is lost since I think there is a lot of common ground. Most of us who do not believe in climate change are not hell bent on destroying the planet. I think if we adopted more of a conservation and protection approach, we could go a long way to solving the problem. I read an article stating that 56% of young people aged 16-25 believe they are going to die from climate change. This is just foolish. The climate change message isn't working if this is the result. And the irony is that I see more trash on the road than ever, with all these people worried about fossil fuels. A softened approach of conservation and protecting the environment would be better.

[Biggd]

Originally Posted by Major

Thinkxingu, I believe it all depends on where you get your news. I am probably correct that you and I get our news from different sources. That said, I've read many articles stating that the number of "extreme weather" events is actually less now than 30 years ago. Statistically speaking, "extreme weather" is not a thing. I think "extreme weather" is an extension of climate change promoted by the alarmists. To me, it's just weather.

However, not all is lost since I think there is a lot of common ground. Most of us who do not believe in climate change are not hell bent on destroying the planet. I think if we adopted more of a conservation and protection approach, we could go a long way to solving the problem. I read an article stating that 56% of young people aged 16-25 believe they are going to die from climate change. This is just foolish. The climate change message isn't working if this is the result. And the irony is that I see more trash on the road than ever, with all these people worried about fossil fuels. A softened approach of conservation and protecting the environment would be better.

Yes, fake news is everywhere regardless of your political lean!
Everyone thinks their side is telling the truth, but all articles are slanted toward who their targeted audience is.

[John Mercier]

Originally Posted by tis

You forgot to add the cost of government regulations which I read in a trade magazine a few years ago was almost a third or almost $100,000 on a $300,000 house. Course it's hard to build a house for that anymore. This was according to the Builder's Assn.

We don't really have a lot more government regulations than we did a decade ago. They slightly tightened the insulating requirement in our area... but a lot of builders were already beyond the specification, and the newest one just requires a change in the weather barrier that can actually be less expensive if the time to pull the correct material is chosen.
It had no effect on ICF or double-stud wall construction techniques.

The door codes are pretty much the same... except a fire door adds spring hinge requirement. The code for the windows didn't change... just the formula used to predict the performance level.

The manufactured homes made in other States almost meet that local code, and a small dollar upgrade of the weather barrier is all that is currently missing.
It is really just the variance in the labor.

[John Mercier]

Originally Posted by Major

Thinkxingu, I believe it all depends on where you get your news. I am probably correct that you and I get our news from different sources. That said, I've read many articles stating that the number of "extreme weather" events is actually less now than 30 years ago. Statistically speaking, "extreme weather" is not a thing. I think "extreme weather" is an extension of climate change promoted by the alarmists. To me, it's just weather.

However, not all is lost since I think there is a lot of common ground. Most of us who do not believe in climate change are not hell bent on destroying the planet. I think if we adopted more of a conservation and protection approach, we could go a long way to solving the problem. I read an article stating that 56% of young people aged 16-25 believe they are going to die from climate change. This is just foolish. The climate change message isn't working if this is the result. And the irony is that I see more trash on the road than ever, with all these people worried about fossil fuels. A softened approach of conservation and protecting the environment would be better.

Insurance companies don't care what we call it, or what causes it. They use actuarial tables that get adjusted so that in the end the company stays profitable. An extreme event to them may just be based on a certain figure of dollars rather than any other measurement; or it may be the size of the claim area.

[Major]

Originally Posted by John Mercier

Insurance companies don't care what we call it, or what causes it. They use actuarial tables that get adjusted so that in the end the company stays profitable. An extreme event to them may just be based on a certain figure of dollars rather than any other measurement; or it may be the size of the claim area.

John, I think you and I agree. One of the posts said that insurance companies are increasing or canceling insurance because of extreme weather. My point is that it is all about the math, including the density of insureds where are properties exposed to things like hurricanes and floods, the values of the insured properties, and the replacement costs. Much like life insurance, it is based on probability and statistics, and the statistics show a decrease in events, but huge increases in the densities, the values and replacement costs.

[FlyingScot]

Originally Posted by Major

John, I think you and I agree. One of the posts said that insurance companies are increasing or canceling insurance because of extreme weather. My point is that it is all about the math, including the density of insureds where are properties exposed to things like hurricanes and floods, the values of the insured properties, and the replacement costs. Much like life insurance, it is based on probability and statistics, and the statistics show a decrease in events, but huge increases in the densities, the values and replacement costs.

You've stumped me again--I can never figure out if you are an actual New Hampshire human being or a Russian bot. But either way, there are about a million sources that show very clearly that extreme weather is on the rise. Within any reasonable parameters, it should not matter where you get your news on this particular issue.

For readers who believe NASA is reputable, here's one. But for folks who do not believe NASA is reputable, Google this yourself...just try to ignore stuff from Exxon Mobil, Vladimir Putin, and others with an obvious interest in sowing distrust

https://science.nasa.gov/earth/clima...nt-or-intense/

[Major]

Originally Posted by FlyingScot

You've stumped me again--I can never figure out if you are an actual New Hampshire human being or a Russian bot. But either way, there are about a million sources that show very clearly that extreme weather is on the rise. Within any reasonable parameters, it should not matter where you get your news on this particular issue.

For readers who believe NASA is reputable, here's one. But for folks who do not believe NASA is reputable, Google this yourself...just try to ignore stuff from Exxon Mobil, Vladimir Putin, and others with an obvious interest in sowing distrust

https://science.nasa.gov/earth/clima...nt-or-intense/

Sorry, but NASA isn’t the same organization that it was when we were kids. NASA has a financial incentive to buy into this climate change hoax.

Plus, you don’t have a great track record when it comes to alarmists causes. You were 100% dead wrong about the Chinese flu.


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[FlyingScot]

Originally Posted by Major

Sorry, but NASA isn’t the same organization that it was when we were kids. NASA has a financial incentive to buy into this climate change hoax.

Plus, you don’t have a great track record when it comes to alarmists causes. You were 100% dead wrong about the Chinese flu.


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More distraction from the topic...but I think everything I posted on COVID was correct, or close enough. Over a million Americans died, millions more were protected by vaccines. It was a terrible thing that could have been much worse.

But getting back to original programming on this thread--I encourage all to Google insurance rates, weather, and trends over time and expected into the future. This is a very serious economic issue for all.

[John Mercier]

Not sure what the extreme weather in this area would be... but mine seems to roughly track the increases in my property value... not quite but very close.