2023 was the hottest year on record, driving up utility costs and homeowners insurance prices
Rising temperatures can cause more natural disasters, leading to more claims and higher interest rates. (iStock)
Global temperatures are climbing higher and last year was the hottest year in recorded history, according to the Copernicus Climate Change Service.
As temperatures climb, so do the costs associated with cooling your home. Last summer saw natural gas consumption reach record highs, with the U.S. Energy Information Administration estimating a 4% increase in electricity generation from natural gas.
But utility costs are just one expense Americans face. Homeowners insurance costs are also rising due to extreme heat and a larger number of natural disasters.
"Severe convective storms are among the most common, and damaging, natural disasters, having caused more than $50 billion in U.S. insured losses in 2023," Michael Barry, the chief communications officer at the Insurance Information Institute, told MarketWatch.
As natural disasters rise, so do claims, resulting in hiked premiums for homeowners. California, Florida and Louisiana are being hit the worst with both natural disasters and corresponding high insurance rates, a First Street Foundation report states. Other states, like Maine and Vermont, which have seen unprecedented flooding in recent years, are likely to see rising rates as well.
"(Climate change) is a problem that is already here," Todd Bevington, a managing director at the insurance broker VIU by HUB, said. "I’ve never seen the market turn this quickly or significantly."
Having enough insurance is vital (and often required), no matter the cost. To ensure your insurance is suitable for your circumstances, visit Credible to check out plans, providers and costs.
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Inflation is pushing homeowners insurance rates higher
Drastic weather changes aren’t the entire cause of increased premiums as insurance costs are also impacted by inflation.
When insurers are setting insurance premiums, they think first and foremost about the costs they’ll have to pay out in the event of a claim. The insurer, Liberty Mutual, explains how the process works.
Since inflation has driven up the cost of building materials for homes and the labor shortage has contributed to costlier repairs, claim payouts must be higher to meet these costs. Insurance companies aren’t eating the cost, they pass it on to their customers.
To make sure you’re getting the best deal on homeowners insurance and have the coverage you need, Credible can walk you through each homeowner's insurance policy and coverage. Plus, they can tell you how to save hundreds on homeowners insurance each year.
Rising rates cause concern for homeowners
Homeowners are reeling from increasing insurance rates, finding it difficult to keep up with the basic cost of living, let alone their insurance rates.
Over half of Americans are "extremely" or "very concerned" about handling any future insurance increases, an Assurance IQ survey reveals. It’s no small group that’s facing these rising premiums, with 63% of survey respondents saying their homeowners or renters insurance premium rose last year.
While monthly mortgage payments are finally trending down, costs are still high for many Americans. Adding high insurance premiums to the mix is causing some homeowners to consider moving to a more affordable state.
Thirteen percent of Americans considered moving across state lines last year due to unbearable homeowners insurance rates, the Assurance IQ survey found.
Making sure you have the lowest insurance rates starts by working with the right insurer. Head to Credible to get a better understanding of the different types of home insurance coverage and compare rates from multiple lenders all in one place.
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