Minnesota recorded the sharpest increase in homeowner insurance premiums in the US, with rates rising 34% over the past year, according to a new report.
Julia Dreier, deputy commissioner of insurance at the Minnesota Department of Commerce, said the jump reflects several pressures hitting the state at once.
More extreme weather has played a major part. Construction and repair costs have also moved higher. Minnesota’s older housing stock adds another layer, since repairs on aging homes tend to be more involved and more expensive.
Dreier said homeowners looking to cut costs should start by reviewing their policies closely and checking what is, and isn’t, included in their coverage.
Some policyholders, she said, carry exclusions they do not realise are there or face deductibles higher than expected.
She also said Minnesota offers programs that reward homeowners for strengthening parts of their property. In some cases, those upgrades lead to sizeable discounts on insurance premiums.
In fact, home insurance premium increases in all 50 states this year, averaging around 8%. California’s increase is not the largest; Louisiana is projected to lead with a 28% rise.
Double-digit increases are also expected in non-coastal states such as Iowa and Minnesota.
The wildfires in the Los Angeles area have caused unprecedented property damage, with insured losses surpassing $50 bn, leading to a negative but manageable impact on insurers’ credit profiles. As for the total loss economic loss estimated to between $135 bn and $150 bn.
Benjamin Keys, a professor of real estate and finance at the Wharton School of the University of Pennsylvania, stated that rising costs are not confined to coastal Florida or wildfire-prone California.
Vermont faces higher costs from recent floods, Colorado sees sharp increases due to wildfires and more hailstorms, and several Midwest states also experience higher premiums.
