The increasing burden of homeowners insurance expenses is becoming a growing worry for American homeowners and potential buyers, according to a survey conducted by Mphasis Digital Risk, a technology services company catering to the residential real estate lending industry.
The nationwide survey, which garnered 1,634 responses from both homeowners and non-homeowners, uncovered widespread apprehension regarding the rising costs of homeowners’ insurance. An overwhelming 90% of respondents expressed concerns about the escalating insurance expenses, with 27% contemplating a move to a different state to escape the financial strain imposed by these costs.
The survey also revealed that 57% of participants would refrain from purchasing a home in an area prone to frequent natural disasters, even if offered subsidies or tax credits. Furthermore, 53% indicated a willingness to relocate to a higher-tax state for better weather, while 42% would consider such a move to reduce their exposure to potential natural disasters.
As reinsurance and rebuilding costs surge, several insurers have either ceased issuing new policies or significantly raised premiums in states susceptible to natural disasters, such as California and Florida. In California, seven of the 12 largest insurance companies by market share have either paused or restricted new policies over the past 18 months. Notably, State Farm and Allstate departed the state in June 2023, leading to a statewide average premium increase of 20%.
In Florida, the exodus of insurers and reinsurers has resulted in homeowners paying nearly $4,000 annually on average for insurance—almost three times the national average. Some homeowners have experienced tripled insurance costs due to these departures and price hikes.
The survey indicates that these challenges not only affect current homeowners but also impact those considering relocation to these states. A substantial 77% of respondents stated that insurers pulling out of a state or significantly increasing insurance costs in that state would have a “significant” impact or make them reconsider moving to that location.
Despite concerns in Florida and California, the survey identified tornadoes as the top natural disaster worrying respondents regarding its potential impact on property value, at 46%, followed by flooding at 45%, hurricanes at 42%, and landslides at 20%.
