Hoosier homeowners are paying $400 more in insurance since 2021, report says

By: Leslie Bonilla Muñiz

Indiana Capital Chronicle

For The Republic

Home insurance premiums in Indiana are on the rise — and nonpayment is forcing more policy cancellations, according to a report released this week by the Fair Housing Center of Central Indiana. Insurers have also chosen not to renew policies.

"Home insurance is vital to keeping homes in safe condition and preserving the wealth that homeowners hold in their properties," the center said in a Wednesday news release. "In recent years, higher insurance premiums have strained the budgets of existing homeowners and are pushing homeownership further out of reach."

The organization also critiqued the limited data available and called for greater transparency.

The average home insurance premium for a typical Indiana homeowner increased by 16%, or $412, from 2021 to 2024, according to the report.

The Indianapolis metropolitan area saw a similar but slightly higher increase of 16.5%, or $440, over that period of time. The report cited an April study by the Consumer Federation of America.

"The premium estimates used by CFA are taken from 'test quotes' for a typical home with a replacement value of $350,000 and a homeowner with mid-tier credit, as well as dozens of other controlled factors," the report observed. "Insurance premiums vary widely based on these factors … By holding these factors constant, CFA estimates are able to show a clear increase over time."

It said CFA's estimates are likely still conservative because they don't account for increases in property value, noting that "a home with a $350,000 replacement value in 2021 would likely cost much more to replace in 2024, which would increase the insurance premium as well."

Despite that, CFA's estimated average Indiana home insurance premium of $2,567 in 2021 was higher than others.

The two most common insurance policies are HO-3 and HO-5, with the latter being more extensive.

The National Association of Insurance Commissioners calculated an average policy cost of $1,058.

Data from the U.S. Treasury Department's Federal Insurance Office revealed a $1,464 estimate for HO-3 and HO-5 policies, according to the report. But because Indiana was one of just seven states that declined to give FIO insurance policy data, the dataset only accounts for insurance policies in Indiana from national insurance providers.

Some homeowners have found themselves without coverage.

One in every 54 policies, or 1.8%, were canceled due to nonpayment in 2022, according to the center's analysis of FIO data. The rate was at least twice as high in four counties: Fayette, Blackford, Vermillion and Sullivan counties.

One ZIP code within Jennings County recorded a whopping 16.7% rate — with one in six policies being cancelled for nonpayment.

Another 1.2% of policies statewide, or one in 85, weren't renewed by the insurer in 2022 for other reasons, per the analysis. Six counties had rates of 2% or higher, peaking with Pulaski County's 6% rate. That means one in every 17 policies wasn't renewed.

"A nonrenewal typically means the insurer saw the home and/or the homeowner as having become too risky to continue to cover," the report explained.

That can occur as homes age and require expensive repairs or replacements of key features, the risk of natural disasters increase, or — as the center noted — the use of aerial photography for risk assessments in lieu of in-person visits.

— The Indiana Capital Chronicle covers state government and the state legislature. For more, visit indianacapitalchronicle.com.

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