Flooded Chicago braces for rising tide of insurance costs

The once extremely profitable Illinois property-insurance industry literally is blowing in the wind and battling a rising tide of property damage because of worldwide climate change.

Billions of dollars in losses sparked by California wildfires and western states forest fires, and an explosion of giant hurricanes, which caused flooding along the Gulf Coast and Eastern seaboard are blamed for the lion’s share of the losses.

So, why is Chicago being hit with a tsunami of property insurance rate increases? Our flooded basements, mostly caused by the Windy City’s ancient sewer system, and the fact our city was built on top of a swamp are a major part of the problem. Buť should middle-class homeowners be forced to tread in foot-deep sewer water, and then be slapped with up to a 60% increase in insurance premiums?

One Northwest Side bungalow owner whose street’s sewers failed, had a total disaster loss of $19,488. Her insurance deductible was $1,500 on an annual policy premium of $2,084. Her State Farm Insurance agent said: ‘‘Notice of a large premium increase likely will come in April of 2026, on the rollover date of your policy.”

State Farm rates up 27% Last July, State Farm announced an average rate hike of 27% this year on homeowner insurance premiums across Illinois, following a 12% increase in 2024.

‘‘State Farm justified this huge increase as necessary to recoup losses from increasing damage claims it pays due to weather, wind and hail,” noted climate specialist Rob Moore, director of flooding solutions and environmental health at the National Resources Defense Council. Meanwhile, State Farm claims it paid out $1.26 in damages for every dollar it collected in premiums.

Basement flood costs Here is a list of costs and insurance payments the Northwest Side homeowner she is a widow with two college-age children received to pay for the damages:

Serve Pro cleaned up the basement flood water and debris, removed the bottom two feet of drywall and insulation, applied anti-mold spray to the walls and installed dehumidifiers. Cost: $8,991.

The flooded, aging furnace and failed central-air conditioning condenser outside had to be replaced at a cost of $8,190.

The water-damaged clothes washer and dryer were replaced at a cost of $1,505, and mold-filled air ducts were cleaned for $575.

O A rusty sewer check valve on the front lawn, which possibly would have prevented, or minimized the flood, if working, was unfrozen and repaired for $1,800.

Total insurance company payout to the homeowner was $17,748. However, the widow put the furnace and air conditioning on her credit card because she was worried State Farm would not cover that loss.

Even without a loss, two Old Town resident investment-property owners were hit with the following hefty insurance-rate hikes from Auto-Owners Insurance.

A vintage, brown brick 4-flat investor owner was hammered with a 59% insurance increase to $6,500 from $4,070 for exactly the same coverage he had in 2024 .- and with the $10,000 deductible even though the building has a totally dry basement.

The resident-owner of a similar graystone 4-flat investment property in Logan Square paid an insurance premium of only $4,150 to Merrimack Mutual Fire Insurance co. for coverage in 2025. Deductible was only $1,000. The coverage for the building, which has a dry basement, also includes the landlord’s personal property.

Beware of vines Last year, because one picky insurance agent said vines growing on the Old Town 4-flat building could impact future insurance rates, the owner spent $3,500 to remove and haul away 44 contractor bags of vines.

The five-day job included digging out roots on the next-door neighbor’s property, covering the gaps with freshly compacted soil, covering the dirt with heavy black plastic sheeting, and covering everything with river rock.

A vintage brownstone 6-flat owner was slapped with a 35% in- surance increase to $7,220 from $5,336 for exactly the same coverage, and even with a $10,000 deductible.

Earlier, she also removed vines from the building, and spent thousands for tuckpointing, and a protective rubberized roof.

Allstate Insurance, headquartered in Illinois, like State Farm, claims wind and hail damase comprise 71% of the $27.3 billion in disaster losses they paid out nationwide between 2012 and 2024. Homeowner insurance prices in Illinois rose 50% between 2021 and 2024, reports the Consumer Federation of America.

Insurance oversight needed?

State Farm’s shocking price hikes prompted Gov. J.B. Pritzker to call for legislation that allows the state to review and approve insurance-rate increases before they go into effect.

“‘Illinois is the onlv state in the nation where insurers can set prices without state oversight,” disclosed climate specialist Rob Moore.

The insurance crisis in Chicago revolves around a high-water table (the swamp), an aging sewer system, faulty check valves, foundation cracks, and gutters and downspouts dumping too much rain water into sewers or ejecting water too close to the property.

Across the nation the problem more often is flimsy construction and dwellings built in valleys too close to rising rivers.

“‘Alabama and North Carolina are issuing grants and other incentives to homeowners who build homes with stronger, better engineered roofs and shingles, that can hold up to hurricane force winds, similar to tornado winds in Illinois,” noted Moore.

Those with the financial resources to do so, may also consider ‘self-insuring.’ That’s what many wealthy residents of Florida do regarding to the high cost of buying hurricane insurance. Save an amount equal to the annual insurance fee in a dedicated account and save it for that rainy ‘hurricane day.’

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,’ 99 the ultimate survival guide for condominium living. Visit