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Homeowners Insurance Crisis Spills Over to Northwest

While the northwest states have enjoyed some of the lowest Homeowners Insurance rates in the country, the insurance marketplace in Florida, California, Texas and other coastal states have been in crisis. The pandemic triggered a chain reaction of construction repair cost increases, supply chain issues, and unexpected high inflation, followed by huge increases in climate driven wild fires, hurricanes and severe thunderstorm related claims. Homeowners Insurance markets in Florida and California have been most affected but all Gulf states have been impacted. On a more limited basis, the crisis is spilling over into all states including here in the Northwest

In response, reinsurers have made major changes in their operations and made large double digit property premium increases to insurance companies. This has, in turn, required primary insurance companies that rely upon reinsurance for risk transfer to make major changes in insuring homeowners, especially in states such as California and Florida that are especially prone to such events according to the US Dept of Treasury, Office of Financial Research

INSURANCE COMPANIES RESTRICT HOMEOWNERS: It has been the perfect storm for insurance companies, who have scrambled to adjust rates and tighten underwriting requirements to slow financial losses.  In May 2023, State Farm quit writing new property insurance in California citing three factors that drove its decision: increasing construction costs, rapidly growing exposure to catastrophic events and a difficult reinsurance market in the state.  Other major property insurers like Allstate, Farmers, USAA and also most other insurance companies have restricted new business writing of property insurance, tightened underwriting, cancelled Homeowners policies and have substantially raised Homeowners Insurance premiums for remaining customers. 

WHAT CAN IDAHO & WASHINGTON EXPECT? Idaho and Washington, like most other states, have not been spared pricing changes and tightened underwriting on Homeowners Insurance. In 2024, renewals of Home policies are coming in with larger automatic inflation-driven increases in the dwelling replacement limits and double-digit premium increases. Premium rates will rise before finding a new equilibrium. 

WHAT TO DO NOW?  Tight underwriting will frustrate any efforts to re-shop Homeowners Insurance policies right now. If you have not been canceled and have been offered a renewal, even if at a higher premium rate, just hang-on!  But, American Insurance agents are available to make sure you have maximized your available discounts.  Bundling your home and your auto insurance creates a large multi-policy discount plus other discounts may be available.  We watch the marketplace closely and are in the best position to assist customers when market conditions stabilize.  American Insurance represents many different companies and will make every effort to help you. For more information contact American Insurance NW, Inc.