Illinois residents are facing a significant increase in property insurance premiums this year, with rates spiking by 20-to-30% since the beginning of 2022. A recent report highlighted that Illinois is one of six states experiencing the steepest increases, joining the likes of Texas and California.
The state’s vulnerability to tornadoes has made it a target for extreme weather-related incidents, leading insurance companies to adjust their premiums accordingly. This information was compiled by S&P Global Market Intelligence and reported by The Wall Street Journal.
Brooke Kelley, the assistant vice president of state government relations for the American Property Casualty Insurance Association, offered insights into the situation. She explained that apart from extreme weather events, rising inflation has also contributed to the surge in property insurance premiums. Kelley noted that inflation is currently at a 40-year high and people are living and working in more expensive homes and buildings situated in hazard-prone areas.
Kelley pointed out that since the start of the pandemic, the construction costs for single-family residential properties have risen by 25% for materials and 30% for labor. These increased costs have led to insurers paying out more in claims than they are collecting in premiums. This imbalance in the insurance market has contributed to the rise in premiums for property owners.
Despite the higher premiums, Kelley emphasized that Illinois typically falls in the middle of the road when it comes to property insurance rates. She highlighted the competitive climate in the state, with more than 200 insurers operating, which benefits consumers by providing them with options for coverage.
To address a common misconception, Kelley clarified that Illinois residents are not burdened with the cost of extreme weather events in other states. There is often confusion around the idea that individuals in Illinois are paying for disasters experienced in other states, such as Florida. However, this is not the case.
Kelley also provided advice for property owners looking to save money on insurance. In addition to shopping around to find the best rates, she recommended focusing on risk mitigation. Taking steps to reduce the risk of undesirable events, such as installing security systems or reinforcing structures, can help lower insurance premiums.
In conclusion, Illinois residents are set to face higher property insurance premiums this year, primarily due to the state’s vulnerability to tornadoes and the rising costs of construction materials and labor. While the increased premiums may be a burden for property owners, the competitive insurance market in Illinois provides consumers with options. Additionally, risk mitigation strategies can help reduce insurance costs.