CAPITAL DISPATCH: Iowa among many states facing higher insurance rates due to extreme weather

Iowa home insurance rates, on average, had a double-digit increase this year due to persisting damages from derechos and inflation.

A recent Insurify report listed Iowa as one of 15 states with a "mounting insurance crisis," and ranked the state third on the list of states with the highest year-to-date increases of premiums for homeowners.

According to the report, premiums for Iowa homeowners increased 14% from October 2023 to 2024, with the average homeowner now spending $2,416 annually. The report also noted a handful of insurance companies have stopped writing home insurance policies in Iowa.

Increasingly, insurance companies are hiking up rates in states, primarily on the coasts, that are consistently hit with natural disasters.

Sonya Sellmeyer, a consumer advocate with the Iowa Insurance Division, said she consistently hears from Iowans who receive increased premiums.

"We're not California or Florida or Louisiana … but we are in a hard insurance market, and it does follow with all these storms," Sellmeyer said.

In 2020, Iowa was one of several Midwest states hit by a derecho that the National Weather Service called, "the costliest severe thunderstorm event in United States history." It is estimated the storms and record high wind speeds caused over $11 billion in damages.

"Mother Nature has not been kind to Iowa," Sellmeyer said. "It just seems like we can't get away from those bad storms."

Sellmeyer said damages from that major event are "still on the books" for insurance underwriting purposes. And parts of Iowa have had at least one derecho each year since, according to the National Weather Service.

These long clusters of thunderstorms and wind can cause destruction similar to tornadoes, and therefore leave lots of homeowners and insurance companies with big repairs.

"When insurance companies start paying out more in claims than what they're bringing in in premiums, or when that number really shrinks, they're going to raise their rates," Sellmeyer said.

Inflation is also a factor in increasing premiums, Sellmeyer said. Although overall inflation percentages decreased from a high of 7% in 2021 to just 2.4%, according to the U.S. inflation calculator, the cost of housing in the Midwest has increased by nearly 5% from last year.

Sellmeyer said an increase in construction material costs and continued supply chain issues are also increasing rates for most Iowans, and making it more difficult to mitigate damage from storms by building more durable, and costly, houses.

The same effect is happening with auto insurance, Sellmeyer said. As cars become more complicated with more expensive repairs, insurance companies pay out more on a claim, which is increasing the overall premiums a company charges.

Insurify data shows Iowa car insurance rates increased nearly 8% from September 2023.

But, Sellmeyer said the situation is not all bleak. Iowans can control certain elements of their policies to try to reduce premiums.

Credit score, the age of a roof, location or the material of a house, are all granular factors at play in insurance premiums, which Sellmeyer encouraged Iowans to be aware of.

"You can't control Mother Nature, but if you can work on your credit score, it might help lower your insurance rates," Sellmeyer said.

She said it's also a good idea to go ahead make any repairs, like improve a roof or installing a railing, that a provider suggests because it is usually more expensive to have to switch providers.

"My big push is : Get out that boring insurance policy and look at it and understand what you have," Sellmeyer said.

Iowans can find other tips on the division's consumer connection page.