Why Home Insurance Rates are Rising — and What You Can Do About It

There’s a pretty good chance that, if you’re a homeowner, you’ve noticed your home insurance premiums increasing over the past few years. All throughout Oklahoma, Texas and Arkansas, homeowners are facing rising insurance costs. Unfortunately, these changes are deeply rooted in the weather patterns and climate risks of the region, and no one can control the weather. However, by understanding the factors that are affecting your policy costs, there are things you do to manage your coverage and protect your home.

 

Today on the Glover Family Independent Insurance blog, we’re going to lay out the impact of the extreme weather across the region and explain precisely why it's causing your home insurance rates to rise. But more than that, we’re also going to tell you what you can do about it to hopefully balance out your premiums.

As with any type of insurance, their rates are heavily influenced by risk. The more risks apparent to the thing you’re trying to insure, the higher the rate is going to be. In the region of the three aforementioned states, the risks of insuring a home are skyrocketing as a result of increasingly frequent and severe weather events. Here are a few of the biggest examples of how this weather impacts the region:

• Tornadoes & High Winds. There’s a reason that the central U.S. area is called Tornado Alley, and Oklahoma is right in the heart of it. While Arkansas and a lot of Texas aren’t in the Alley proper, they’re still highly vulnerable to tornadoes and high winds. Both of these phenomena can cause catastrophic damage to roofs, siding, windows and more aspects of your home’s exterior. This makes them a major factor behind the rising number of insurance claims, which forces insurers to respond by increasing the risk and raising premiums in the area.
• Heat & Drought. Prolonged heat waves are another growing concern throughout the region, and while it might not be obvious they have contributed to the rising insurance rates in a more indirect way. What many don’t realize is that heat can weaken the structure of your home over time, which exacerbates wear and tear on things like roofing materials and increases the risk of fires – especially in areas where drought conditions have dried out the local vegetation. Climate models are predicting these conditions will worsen over time, causing insurance companies to factor them into their long-term risks.
• Winter Storms & Freezing. In contrast, winter storms and freezing temperatures can have just as much of an effect on the region. Most people consider the region as warm and sunny all year round, but that’s a big part of the reason these two weather conditions are so problematic. Look at the infamous 2021 winter storm that hit the region as a major example. The storm caused billions of dollars in damage thanks to frozen pipes, collapsed roof, power outages and more. These events, though sporadic and rare, have very real evidence to cause insurers to reevaluate their risk models for cold weather in the area.
• Flooding & Severe Storms. Although flood insurance is typically covered under a separate policy, water damage caused by severe storms is under the purview of your standard home insurance coverage. With the increase in heavy rains and flash flooding throughout the region, this is just one more thing leading to higher premiums.

Although it isn’t going to make you feel any better about the situation, the simple answer to this question is that insurers are trying to keep up with the growing financial risks that extreme weather has created throughout the region. In order for insurance companies to remain solvent and prepared for future events, they need to adjust their premiums in response to the rise in damage claims.

 

There are three big things that are causing the costs to rise as dramatically as they are, and the first is the inexplicable increase in the frequency and severity of these extreme weather events throughout the region. The second is, unfortunately, inflation within the construction industry. Inflation has driven up the cost of the materials and labor required to repair or rebuild damaged homes, which means insurance companies have to pay more to cover the claim.

 

Finally, there has also been a strain on the reinsurance market as a result of these severe weather events, which causes reinsurance costs to rise as well. Reinsurance policies are what protect the insurance companies themselves from catastrophic losses, so naturally a rise in their costs in turn raises the cost of premiums.

So, finally, what exactly can you do about it? Nobody is capable of controlling the weather, but there are some other steps you can take to reduce your risk and potentially lower the cost of your home insurance in kind.

• You can invest in weather-resistant upgrades to make your home more resilient to extreme weather; such as reinforcing your roof, installing storm shutters or upgrading to impact-resistant windows. These will reduce the risk of potential damage, and many insurers will also offer discounts for weather-proofing measures like these.
• Make sure to review your coverage annually to ensure that you aren’t being over- or under-insured for your given situation.
• Bundle your policies together to receive discounts.
• You can further reduce the risk of damage to your home by properly and regularly maintaining your home; keep your roof in good condition, trim trees that might cause damage by dropping branches and clear your gutters to avoid water buildup.
• Finally, consider a higher deductible if it’s within your means to do so, as this can lower your monthly premium for the trade off of higher out-of-pocket costs for small claims.

If you have any further questions, don’t hesitate to get in touch with us here at Glover Family Independent Insurance!