Getting insurance for cars and homes has gone from routine to challenging for many Americans.
The big picture: Homeowners and drivers face sharply rising premiums, less coverage, and few, if any, choices of insurers. In some locations, the only options are bare-bones coverage or none at all.
Additionally, economic inflation has worsened matters, raising the cost of repairing or replacing cars and homes.
What they’re saying: “I have never seen the overall market this bad,” Barry Gilway, retired head of Florida’s Citizens Property Insurance, told the WSJ.
- Citizens Property is a state-created insurer of last resort in the Sunshine State. It is now the leading provider of home coverage, according to reports.
By the numbers: Insurers who issue home and auto policies racked up $32.2 billion in net underwriting losses in the first nine months of 2023. According to ratings firm AM Best, that’s $7.6 billion worse than a year earlier.
Zoom in: Insurance premiums are far outpacing inflation. Auto insurance premiums surged 20.3% in December 2023 compared to a year ago, Labor Department data showed.
Rate hikes are not much better for homeowners insurance in many locales.
- Farmers Insurance hiked home rates by more than 23% last year for thousands of policyholders in both Illinois and Texas.
- State regulators approved a 20% rate increase for State Farm customers after the insurer stopped writing new home insurance policies in California.
- USAA raised rates in 44 states through the first eight months of 2023, with about 60% having a double-digit calculated effective rate increase. Arizona’s 36.6% effective rate change is the largest for the insurer.
What we’re watching: Some consumers are forgoing homeowners coverage—if they have a choice. However, most mortgage lenders require borrowers to have home insurance.
Meanwhile, insurers say they won’t entirely abandon risky areas. “I don’t think it’s like the insurance industry said, we’re done here, you’re on your own,” Allstate’s CEO Tom Wilson said to the WSJ. “It’s just, there are certain places where if we can’t spread the cost appropriately and we can’t price it, then we shouldn’t do it.”
Where you can get help: In today’s high inflation environment, dollars and cents matter, but picking insurance coverage should be more than a monetary matter. Working with a trusted, independent insurance advisor who understands the marketplace can be beneficial in making sure you have the right protection.