Rising Home Insurance Premiums Drive Homeowners to Seek Better Coverage
In a Denver office, insurance agents assist homeowners seeking more affordable coverage options. Morgan Lloyd from Trailstone Insurance Group notes a growing trend of clients searching for better value as premium costs rise significantly.
One such client, Eric Shannon, faced a substantial premium increase from Allstate, with his costs jumping nearly 50%, from approximately $4,500 to $6,600. Shannon's situation reflects a broader trend in Colorado and the Mountain West, where similar stories are becoming increasingly common.
A national report analyzing over 70 million mortgage payments found that inflation-adjusted insurance premiums have surged about 25% nationwide since 2020. Colorado, in particular, has seen more dramatic hikes, with average costs more than doubling from 2014 to 2024. This positions the state among the top five most expensive for home insurance, alongside Florida and Louisiana.
Benjamin Keys, a Wharton School professor and coauthor of the report, attributes these rising costs to inflation, along with increasing construction and labor expenses. In the Mountain West, natural risks such as wildfires and hail are also significant factors. In Colorado, hail, rather than wildfire, is identified as a primary driver of these premium hikes. The Colorado Division of Insurance corroborates this, noting that hail is the biggest contributor to escalating insurance costs statewide.
In Shannon's county near Denver, state data shows hail accounts for about half of the average annual premium, while wildfire risk contributes only 6%. Shannon, who resides in a suburban area with increasing expenses such as mortgage, property taxes, and daycare, is concerned about adjusting his budget to accommodate these rising insurance costs.
Keys observes that homeowners are becoming more attuned to their insurance premiums, historically overlooked compared to mortgage interest rates. Insurance payments are becoming a larger component of monthly homeownership costs, impacting affordability.
To lower his premium, Shannon explored alternatives and secured a better rate with a smaller insurer, Auto Owners, through Trailstone Insurance. Lloyd emphasizes that documenting hail-resistant features, such as concrete roof tiles, helped reduce Shannon's costs. He also benefited from bundling home and car insurance.
Carole Walker of the Rocky Mountain Insurance Information Association advises homeowners to mitigate hail risk through roof improvements, which can lead to insurance discounts. Despite potential savings, broader claims trends suggest that homeowners should anticipate continued premium increases, Walker warns.