HomeHome InsuranceNebraska homeowners insurance costs among nation's highest

Nebraska homeowners insurance costs among nation’s highest

Jeremy Calcara was shocked to see the proposed increase in his homeowners insurance this year.

The Lincoln man said he had been paying about $1,700 a year for coverage through Nationwide, but his proposed rate for 2024 was more than $2,500, an increase of about 50%.

Calcara said he was expecting some kind of increase, especially since the assessed value of his home went up nearly 50% in 2023, but a 50% increase for his homeowners insurance rate “seemed ridiculous to me.”

Ridiculous or not, Calcara’s experience is par for the course for many Nebraska homeowners.

A report from LendingTree is the latest to validate what the state’s homeowners already know: Nebraska continues to have some of the highest homeowners insurance rates in the country, and they keep going up.

The report released Tuesday by the online mortgage company shows that over the past five years, Nebraska had the second-largest cumulative increase in homeowners insurance rates at 59.9%. That trailed only Arizona, which had a 62.1% increase over the same period.

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The report also showed that homeowners insurance increases are accelerating in Nebraska more than anywhere else, with the state having the highest increase in the country in the first quarter of this year, at 13.3%.

Nebraska’s recent and longer-term homeowners insurance increases are much higher than the national averages, which were up 37.8% over the past five years and 5.8% in the first quarter, according to the LendingTree report.

Those increases have helped push the average cost of homeowners insurance in Nebraska to $5,363 annually, according to LendingTree, second only to Oklahoma and more than double the average rate nationally of $2,478.

The LendingTree report follows one from online data research center Insurify earlier this year that showed Nebraska’s homeowners rates were 99% more than the national average in 2023. Another report last year from PolicyGenius also found that Nebraska’s average homeowners rate is double the national average and second-highest in the country.

Experts say insurance increases nationally are being driven mostly by two main factors.

One is inflation, which has not only driven up property values but also has led to price increases for building materials and labor, which in turn has boosted insurers’ costs to repair and rebuild damaged structures.

“Insurance companies have to repair more homes, and it’s more expensive to rebuild each one than it might have been just five years ago,” said Rob Bhatt, a LendingTree home insurance expert and licensed insurance agent. “When their costs of paying claims go up, they turn around and raise our rates.”

The other main factor is an increase in severe weather events linked to climate change.

Nebraska has seen that first hand, with events such as the 2019 floods, the December 2021 derecho and tornado outbreak, and the tornado outbreak in Lincoln and Omaha on Arbor Day this year, which real estate data firm CoreLogic estimated may have done more than $500 million in damage.

The LendingTree report said wind and hail accounted for nearly 43% of all homeowners insurance claims between 2017 and 2021.

According to the National Weather Service, there already had been 63 confirmed tornadoes in Nebraska this year as of Tuesday, the second-most ever recorded before June.

And Nebraska annually ranks as one of the worst states for hail damage.

According to the Insurance Information Institute, Nebraska ranked second in the country last year for the number of major hail events it experienced, with 486. That was the 11th year in a row the state ranked in the top five.

Nationally, there were 28 weather disasters in the U.S. that caused at least $1 billion in damage in 2023, according to the the National Centers for Environmental Information, an all-time high.

Those types of events are one of the big reasons premiums have risen so much so fast in Nebraska.

“We’ve seen a significant jump in the number of billion-dollar weather events affecting Nebraska,” said Justin Hakes, vice president of public affairs for the National Association of Mutual Insurance Companies.

Hakes said that from 1980-1999, there were only nine weather disasters in the state that caused at least $1 billion in damage. But that number increased to 35 from 2000-2019. And there were 17 from 2020-2023.

Hakes said the combination of bigger weather disasters and higher costs has meant insurers in Nebraska have often been paying out more in claims than they’ve taken in in premiums in recent years.

According to data from Hakes, property insurers have paid out more than they’ve taken in in Nebraska six out of the past 11 years. In four of those years — 2013, 2014, 2017 and 2022 — they paid out more than $1.50 in claims for every dollar in premium, which in every case was significantly higher than the nation as a whole in those years.

Nationally, underwriting losses for U.S. property/casualty insurers was a combined $38 billion in 2023, which was a 10-year high.

State Farm, which is the largest insurer of property in Nebraska, had a net loss of $6.3 billion last year, which was actually an improvement over the $6.7 billion it lost in 2022.

Lincoln-based Farmers Mutual of Nebraska, which is the largest property/casualty insurer based in the state, recorded more than $1 billion in total claims losses in 2022 and 2023, and recently saw its long-term issuer credit rating reduced to negative by ratings agency A.M. Best.

Chairman and CEO Mark Walz declined to comment for this story, but he told the Journal Star in March that these are challenging times for insurance companies.

“I’ve been in this industry for 33 years and I have never seen it as challenged as it is right now,” Walz said at the time.

For those facing large homeowners insurance increases, it’s a good idea to shop around, even if you’ve been with the same insurer for a long time, and to ask your current insurer for a discount

A recent survey from ValuePenguin found that more than half of homeowners last year either shopped around or asked for a discount from their current insurer, and those who did saved more than $470 on average.

He said that, faced with both a property tax increase and an increase in his homeowners insurance, he decided to shop around for a new policy and was able to find the same coverage for less than he had been paying before, although he had to accept a higher deductible.

“Since I can’t do anything to control the increase in my monthly payment that was going to come from taxes, I opted to change the variable I could control.”

A 4x timelapse seen from downtown Lincoln.

Reach the writer at 402-473-2647 or molberding@journalstar.com.

On Twitter @LincolnBizBuzz.

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