Blog

The Growing Need for Home Insurance

In today’s world, the need for home insurance is becoming increasingly critical. According to the Insurance Information Institute, a staggering 12% of American homeowners currently lack insurance coverage. This statistic highlights a concerning trend that could have serious implications for many families across the country.

Rising Costs and the Choice to Go “Naked”

The primary reason for this lack of coverage is no secret: the cost of home insurance has escalated sharply in recent years. While mortgage lenders typically require borrowers to maintain insurance, the 40% of Americans who own their homes outright may view insurance as optional. This mindset becomes especially prevalent when facing dramatic premium increases, such as the case of a California homeowner whose premium tripled in just one year, as reported by USA Today.

Opting out of insurance is a risky choice. The reality is that insurance premiums are rising significantly – by more than 11% nationally last year, according to S&P Global Market Intelligence – because payouts for damage are also increasing. Homeowners who can’t afford insurance premiums likely can’t afford to pay out of pocket for significant storm damage either.

Increasing Severity of Storms and Natural Disasters

While storms may not be more frequent due to climate change, they are certainly more severe. Wildfire seasons now seem to span the entire year, and the costs associated with replacing and repairing buildings have surged. Last year, insurers paid $1.10 for every $1 in premiums collected, according to the Insurance Information Institute.

Moreover, the top 10 growth states identified in the 2020 U.S. census are all vulnerable to hurricanes. However, the issue of increasingly extreme storms causing costly damage is not confined to the Gulf Coast alone. Residents of the Mankato area experienced this firsthand last month.

The Crisis in High-Population States

The issue of premium affordability has reached crisis levels in Florida and California, two states with high populations and significant exposure to natural disasters. Insurance providers are withdrawing from these states, leaving homeowners with fewer options and no easy solutions. This problem spans political divides, affecting both red-state Florida and blue-state California alike.

Addressing the Root Problem

The core problem is the sharp rise in property damage, necessitating a corresponding increase in the cost of insuring against it. To the extent that government intervention can impact this cycle, efforts should focus on controlling the underlying problem of increasing property damage rather than merely addressing the symptoms of rising insurance premiums.

Why Home Insurance is Essential

At Combined Insurance Service LLC, we understand the challenges homeowners face with rising insurance costs. However, the protection provided by home insurance is invaluable. In the event of a natural disaster or significant damage, having insurance can mean the difference between recovery and financial ruin.

We encourage homeowners to carefully consider their insurance options and the potential risks of going without coverage. While the cost of premiums may be daunting, the peace of mind and security that insurance provides is worth the investment.

For more information on how we can help you find the right coverage for your home, contact us at Combined Insurance Service LLC today. Your home is one of your most valuable assets – ensure it’s protected.