Natural disasters have become more frequent than they were in the past. Moreover, they have also become more severe, which has caused insurance rates to hike up, especially if the consumers live in an area that has been classified as a Red Zone by the government.
Every year, the rates have always increased marginally because of inflation. This time, the rise is not just a slight one; it is very significant and has caused premiums to go up by as much as 30%. Insurance providers claim that this step is mandatory when you consider the fact that likelihood of disasters have increased. Over the past few years, insurance companies have had to pay thousands of dollars when homeowners made claims and because of this, they have suffered significant losses.
The rise in insurance premiums is not limited to just one state. It is a step that has been taken in the entire country, especially in those areas that are near the coast. Obviously, the increases are not the same in every region, but they have still risen considerably. Homeowners voice their frustrations but insurance providers have turned a deaf ear to them.
A survey has reported that insurance companies’ plans are not only limited to increasing the rates on their policies, they are also reducing the coverage levels they provide. An insurance representative from a reputed provider states that in the past two or three years their company has had to bear several losses and now they must raise rates to compensate for them. As for the coverage levels, those have been reduced to ensure that such substantial losses do not occur in the future.
We talked to a consumer who is a client of a reputed insurance provider. The consumer told us that in just a year, his premiums had been raised from $668 to $912, which has made him quite mad. He went on to add that his family had never made a claim, yet still had to bear this increase.
We have also heard stories of homeowners who have experienced a 50% rise in rates. These people are now finding it difficult to pay for their premiums.
The insurance hikes have affected the entire housing market, but the impact is more common in flood prone areas. A real estate agent, in one of these regions, said that homeowners are facing difficulties in selling their houses as there are no buyers. How the rest of the housing market takes this is yet to be seen.
Source: www.business.time.com
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