Homeowners face sharp insurance hikes amid costs, climate pressures

As several insurers request significant increases, New Jersey homeowners are feeling the pain. Nearly half of the state’s 127 homeowners insurers requested rate hikes this year. Over fifty requested double-digit surges and were granted, at least partially.

St. Paul Protective Insurance Company requested a 40% increase, one of the boldest. Only 19.8% was authorized by regulators. The greatest allowed increase was 23.6 percent for Founders Insurance, while Farmers Property & Casualty received 21.6 percent after requesting 30.7 percent.

Experts attribute this rate increase to many converging influences. Building supplies, labor, and replacement parts are more expensive due to inflation. Construction repairs are more expensive and delayed due to supply chain delays. While weather events become more severe and frequent, insurers incur more loss costs. Rebuilding homes has increased in value, straining underwriting models.

In New Jersey, insurers must submit “reasonable, adequate, and not unfairly discriminatory” rate hike applications for regulatory approval. However, the rising trend implies that insurers believe passing on costs to policyholders is their only option.

Future hikes may be planned. Several insurers have requested double-digit increases. For homeowners, that suggests insurance costs may rise beyond the present cycle.

Many residents may face unpleasant choices when rates rise. Some may choose cheaper policies, while others may have to pay more or reduce coverage. In New Jersey, affordability and protection become increasingly delicate.

Rising costs are making insurance a major financial concern for homeowners. Policymakers must safeguard consumers, ensure insurer solvency, and stabilize the housing market as costs rise.

Sources
NJ news reporting on New Jersey homeowners insurance rate requests and approvals
Industry analyses of home insurance cost trends and rate pressures