Seriously, how is the average homeowner able to afford all of these premium increases?

[NY independent]

It's a rhetorical question, but one I ask myself every day. With all of these huge rate increases on HO, auto, boat, CL, Health, how are even the mass affluent able to afford to pay these? After all of the shopping (without success), the complaining (it's just), yelling and screaming, they are still able to write the check. I ask myself, what the tipping point will be when they no longer can. I still see many new ($70K+), luxury cars driving around (so many Teslas) and ask myself if they too are yelling at their insurance providers over the premium increases.

 

[InsuranceAgent411]

They are not affording it. More and more people are having to pick up a second job or side gig just to make ends meet. Most of my clients are affected and it is a very difficult situation for most everyone. At my last doctors appointment the PA had started working for doordash to make enough to get by. This is the perspective of where I am.

 

[shawnmwalker]

It won't be the Prem increases that kicks people out of Homeownership. It will be the ACV roof or the X% ded on the roof.

When a client files a roof claim in the future and has to find 20k or more to cover the claim..... Many Americans will have to walk away from home ownership.

 

[LostDollar]

It won't be the Prem increases that kicks people out of Homeownership. It will be the ACV roof or the X% ded on the roof.

When a client files a roof claim in the future and has to find 20k or more to cover the claim..... Many Americans will have to walk away from home ownership.

I am not an agent.
I don't understand the ACV Roof portion of your comment above, but with the deductible portion of the comment:

my current homeowners insurance has a $1,500 deductible. Is the conept of your comment suggesting that in the future one might expect to see roof coverage excluded from the $1,500 deductible, and a separate and much larger deductible applied to the roof?

Thanks.

 

[Policy Monkey]

I am not an agent.
I don't understand the ACV Roof portion of your comment above, but with the deductible portion of the comment:

my current homeowners insurance has a $1,500 deductible. Is the conept of your comment suggesting that in the future one might expect to see roof coverage excluded from the $1,500 deductible, and a separate and much larger deductible applied to the roof?

Thanks.

I do not presume to speak for shawnmwalker (He speaks very well for himself with no help from me, LOL), but I think I can answer your question. In short, your take on the roof deductible is correct. More and more carriers are adopting (or offering) higher deductibles for roof damage in exchange for reduced premium and/or RCV coverage.

RCV = Replacement Cost Valuation (without depreciation for age and condition).
ACV = Actual Cash Value (includes depreciation for age and condition)

 

[whatyouwantfinally]

It won't be the Prem increases that kicks people out of Homeownership. It will be the ACV roof or the X% ded on the roof.

When a client files a roof claim in the future and has to find 20k or more to cover the claim..... Many Americans will have to walk away from home ownership.

Ha, the new storm chasers will be even worse.

"So...you're screwed. Wanna sell your house?"

 

[LostDollar]

I do not presume to speak for shawnmwalker (He speaks very well for himself with no help from me, LOL), but I think I can answer your question. In short, your take on the roof deductible is correct. More and more carriers are adopting (or offering) higher deductibles for roof damage in exchange for reduced premium and/or RCV coverage.

RCV = Replacement Cost Valuation (without depreciation for age and condition).
ACV = Actual Cash Value (includes depreciation for age and condition)

Hmm.

My vote for @Al3x Lee may be wavering. Not sure I like the ACV thingy. All the people building beachfront homes in FL and NC and homes in CA in fire and mudslide zones are running up the premiums in my on the edge of tornado zones.

 

[Al3x Lee]

Hmm.

My vote for @Al3x Lee may be wavering. Not sure I like the ACV thingy. All the people building beachfront homes in FL and NC and homes in CA in fire and mudslide zones are running up the premiums in my on the edge of tornado zones.

LostDollar, ACV is a big brain play. I know you have a big brain, so hear me out: If insurance didn't exist, who would take the risk of building a house on a beachfront in Florida or in fire-prone areas of California? Homeowners in these high-risk zones might reconsider their decisions or invest more in resilient designs if they couldn't offload the risk to insurers. Your premiums are being ran up because of people like them.

By adopting the Pure ACV Valuation System (PACVVS)™, we can encourage more prudent decision-making and fairer claim payout distribution and lower premiums.

It won't be the Prem increases that kicks people out of Homeownership. It will be the ACV roof or the X% ded on the roof.

When a client files a roof claim in the future and has to find 20k or more to cover the claim..... Many Americans will have to walk away from home ownership.

I wholeheartedly disagree, Mr. Walker. The real threat to homeownership isn't ACV, it's the increase in premiums and reduction of carrier options. This is especially problematic given the increasing frequency and severity of weather events due to climate change, which places additional strain on insurance companies. (And ultimately @LostDollar's wallet. Can this man get a break?)

Homeowners might not struggle as much with affording their premiums if insurance companies didn't promise replacement cost coverage to every property owner nearly indiscriminately. Instead, they could adopt a more selective approach, such as my proprietary - Selective Treatment for Real Insurers Calculating True Actual Cash Valuations (STRICT-ACV)™ - and by selective, I mean they select ACV for everyone. It's fair and equitable. Even the Liberals love it. (I should know, I am California's biggest Liberal, figuratively and literally)
--
For instance, under STRICT-ACV™, landlords with extensive real estate portfolios would have to bear more of the natural risk that comes with their investments, rather than transferring all the risk to a risk pool. This would cause careful consideration when determining if they should hold onto properties they can't adequately maintain, afford or retain a portion of the risk on. You're already starting to see how this would introduce a more balanced and fair risk-sharing system.

Risk-sharing on older roofs, where insurers only cover a portion of the replacement cost, could potentially lead to a decrease in real estate prices. People who cannot afford to share the risk would be more likely to sell their properties, increasing the availability of homes on the market. This increased supply could make homeownership more attainable for more Americans, breaking the cycle of renting and promoting stability in the housing market.

The focus shouldn't just be on premium increases but also on the broader structural changes needed within the insurance industry to promote a sustainable economy and promote broader homeownership for the younger generations.

By addressing the root causes of high insurance costs and encouraging responsible property ownership, we can create a more equitable system that supports both current and aspiring homeowners.

 

[shawnmwalker]

@Al3x Lee ,

You crack me up!

You don't agree that a higher degree of cost sharing might cost Americans their home? You agree with that statement! If carriers push too far, Americans are not financially equipped to pay dramatically more for their policy, and their claim.

 

[Al3x Lee]

@Al3x Lee ,

You crack me up!

You don't agree that a higher degree of cost sharing might cost Americans their home? You agree with that statement! If carriers push too far, Americans are not financially equipped to pay dramatically more for their policy, and their claim.

Ah, but you only prove my point! If homeowners are forced to sell, the real estate market begins to heal. Just like a used car, a house would become a place to live instead of an investment vessel.

If the roof comes off my 1993 Honda Accord in a wind storm, do I deserve a 2024 Honda Accord, or the actual cash value of my 1993 Honda? The cost differential is closer to $30k, higher than the cost of a house roof replacement, yet most people would argue I should take the $1,000 check from my insurance company and finance the difference if I want a new one.

You could make the argument that I deserve a new roof on my vehicle, but the insurance company would just total the vehicle out.

- The majority agree with ACV for vehicles, why are houses any different? - It's only different if you see your house as an investment vehicle.