Home insurance rates on rise
Homeowners insurance rates spiked in recent years in Pennsylvania and across the nation, and catastrophic weather and other factors could double the rate of increase this year, according to the state Insurance Department.
Rates across the state climbed 8.94 percent through midyear, nearly doubling last year's increase of 5.07 percent.
“With two more quarters to go, that number can and will change,” said Insurance Department spokeswoman Melissa Fox. “It is not final. ... (But) the department is noticing an upward trend. This trend is not specific to Pennsylvania — all states are experiencing the same thing.”
Thanks to last year's tornado in Westmoreland County, Richard Stoner, 67, of North Huntingdon had his rates with Erie Insurance increase sharply.
“After the tornado hit, I had to have the roof replaced,” Stoner said. “I'm probably paying about another $200 a year now because of it.”
He estimated his annual premium is now about $700.
Rates across the country are projected to climb by 5 or 6 percent this year, continuing a four-year trend and pushing the national average annual premium above $1,000 for the first time, predicts the nonprofit Insurance Information Institute.
The average annual homeowners premium was $791 in 2008, according to the institute.
Severe weather, the rising cost of repairs and a growing number of claims are driving the increases, said Robert Hartwig, an economist and president of the insurance institute.
“Weather is becoming more volatile and severe, and the cost associated with those claims is going up,” he said.
Highlighted by deadly tornadoes in Missouri and Alabama, insurers paid out a record $35.9 billion for catastrophic losses in 2011, compared with an average of $23.8 billion annually over the previous decade, Hartwig said.
Allstate raised rates in Pennsylvania by 15 percent in March. Both Erie Insurance and Travelers later received permission from the state Insurance Department to increase rates by about 9 percent.
“It was a justifiable rate increase,” said Joe Vahey, vice president and personal line product manager for Erie Insurance. “2011 was a very significant catastrophic event year. ... Customers have seen firsthand the damage these recent storms have caused.”
Among those events was severe flooding in the central and eastern parts of the state last August and September from the remnants of Hurricane Irene and Tropical Storm Lee. The storms caused about $425 million in losses covered by private insurers and government relief agencies.
Pennsylvania suffered $4.6 billion — ranking 20th nationally — in insured property damage for all catastrophes since 1998, according to figures from Verisk Analytics, a New Jersey-based insurance risk research company.
Over that same period, Pennsylvania's $2.3 billion in severe weather-related losses ranked 19th; its $1.04 billion in hurricane-related losses ranked 11th.
But it isn't just the storms that hit here that affect Erie Insurance, the country's 15th-largest homeowners insurance premium holder with 1.7 million policies in 11 states and Washington, D.C., Vahey said.
In addition to raising premiums, some insurers are demanding higher deductibles and limiting the coverage they offer. In some storm-prone states, including Florida, Alabama and North Carolina, some insurers dropped tens of thousands of customers.
Insurance companies are prevented by law from raising rates for past weather events, but they factor in weather trends in determining their potential exposure in the future.
“That's been driving claims up, and that eventually drives rates up,” Hartwig said. “You're making a bet that your home will be destroyed or damaged. The insurance company is making the opposite bet.”
Staff writer Bill Vidonic contributed to this report. Jason Cato is a staff writer for Trib Total Media. He can be reached at 412-320-7936 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Squirrel Hill pantry volunteer’s donation eases struggles for families
- Medical research labs pinched by falling federal funding
- Pitt professor’s UV technology destined for Mars in 2020
- Teachers’ roles evolve as districts rely more on computers
- Amid tears, but with resolve, Oakmont church members vow to rebuild from fire
- Legally blind Pirates fan hangs on every play, has kept score for decades
- Water service restored to CMU campus
- Health department sets 1st of 13 public meetings
- Duquesne Light hires new operations vice president
- Photo Gallery: Junior Great Race
- Newsmaker: Prince Matthews