Average cost of insurance coverage is falling
Homeowners insurance in the U.S. may be on its way to becoming more affordable, according to data from HomeInsurance.com’s RateReport. Over the past few years, homeowners coverage in the U.S. has been considered a problematic issue because of its costly nature. Those located in coastal communities tend to pay more for their coverage due to their exposure to natural disasters. Recent climatic events, such as the so called Polar Vortex, have also had some impact on the insurance market, but that impact may actually be modest.
Rates fall to $825 a year
According to the RateReport, average premiums for homeowners coverage in the U.S. has dropped to $825 per year, down from over $900 a year as recorded in 2012. Premiums throughout the country had increased for the past three years, but 2013 has had some impact on the insurance market in terms of natural disasters, new regulations coming from states, and economic shifts.
Home value rises, but insurance rates are not
Homeowners insurance premiums fell despite a 9.4% increase in the average value of homes nationwide. The National Association of Realtors suggests that the housing market has shown healthy signs of recovery in the wake of the economic problems of the past. Typically, when the value of homes increases, so too does the cost of insurance coverage. Better construction methods and homes being built in safer locations, however, may be a contributing factor to falling insurance rates.
Rates are highest in states exposed to natural disasters
While the average cost of insurance coverage has fallen, there are some states that have experienced an increase in premiums. These states are located along the Gulf of Mexico and along the East Coast of the U.S. States in these areas are typically exposed to powerful natural disasters, such as 2012’s Hurricane Sandy. These disastrous events can cause significant damage to homes and other properties, hence the prevalence of higher insurance rates.