Home insurance skyrockets to 'astronomical' rates for many on the MS Coast. 'It's scary.' [The Sun Herald]
May 2—Homeowner insurance rates along the
"It's getting ugly out there," said
In addition to higher costs, coverage options are in some cases shrinking, too, both insurance executives said.
The higher cost of insurance is forcing homeowners to make tough financial decisions. Coupled with rising interest rates, insurance costs are also contributing to a slow-down in the real estate market, said
Single-family home sales are down about 26% for the first quarter of 2023 compared to the same period in 2022, an analysis by
"Everything we keep hearing is that it's increasing, but now I keep hearing these rates are getting astronomical. It's scary," said
The insurance and real estate professionals offered advice for homeowners facing higher homeowner insurance bills.
Why insurance costs are increasing in the
Homeowners tend to see no rhyme or reason for their escalating insurance costs. A recent Facebook post on the Ocean Springs Talk of the Town page said: "Looking for home insurance our policy, almost doubled with no claim ... thank you in advance."
But an individual homeowner's claims history is only a small part of the equation insurers use to set rates.
Verdon and Mosher said current increases are driven by the cost of reinsurance, which is basically insurance that insurance companies buy to lower their financial risk. And reinsurers are drawing the line on what risks they are willing to accept.
Mississippi Insurance Commissioner
"Climate change is definitely a thing," Verdon said.
As reinsurers tighten their rules, some insurance companies have dropped out of coastal markets altogether, although Chaney works to bring in more companies and encourage those that are here to stay.
The insurance companies still in the market are more finicky about the risks they'll accept. And they have better technology to hone in on risks, old roofs being a big drawback. Insurance companies can use satellite imagery to detect a roof's age.
Some insurers are no longer willing to offer replacement-cost coverage for roofs that are more than 10 or 15 years old, Verdon said. Instead, coverage is based on an older roof's actual value at the time of loss. Sometimes, he said, this lower coverage is buried deep in the policy and homeowners are unaware until their roof blows off that they will have to pay more out of pocket to replace it.
One insurer, he said, no longer covers fences.
"Now, more than ever, is a good time to read your policy," Verdon said. "Don't just buy on price, buy on coverage."
How to lower your rates during inflation
Accepting a higher deductible is also a way to lower insurance premiums.
Not everyone has
"That scares me," Mosher said. "It's got to be stressful to own your house outright and not have wind coverage if a storm is out there."
More and more homeowners near the water are forced to accept coverage from surplus lines companies, those that are not regulated by the state. Admitted carriers such as
Surplus lines companies can charge what they want for homeowner's insurance, while admitted carriers must get increases approved by the
Chaney said homeowners should consider higher deductibles or lower coverage on contents to reduce their insurance costs.
The cost of insurance might have been an afterthought for home buyers before Hurricane Katrina hit in 2005, but it's a major factor in today's real estate market.
A buyer might have to lower what they can pay for a house because of insurance rates.
"It's a widespread problem, but especially true nearer the water," Swoope said.
Insurance prices drop on newer construction north of
On older houses valued at less than
Insurance has become such a driver in the housing market that the
The association's CEO,
"We actually reached out for other (insurance) quotes and couldn't even get other quotes because of our proximity to the beach."
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