A man and a woman at a table review insurance documents in front of a laptop.

Homeowners who are renewing their home insurance policies are finding their rates are drastically climbing. Insurance companies point to rising material costs and climate change as the main reasons behind the increases.

Premiums are up, on average, by 4%. The average annual homeowner insurance premium is $1,398, according to the Insurance Information Institute, known as Triple-I. Since 2017, premium rates are up 11.4%. That is faster than inflation, The Washington Post reports.

Insurance companies say homeowners should brace themselves for further rises.

Homes near areas prone to natural disasters are seeing some of the steepest spikes. Insured damage from tornadoes, hurricanes, severe storms, wildfires, and other natural disasters reached $82 billion this year.

“Climate risk is continuing to put pressure on all things weather-related,” Dan Porfilio, the chief insurance officer at Triple-I, told The Washington Post. “We are seeing more severe hurricanes, more severe wildfires, and the science isn’t as clear on tornado events in terms of whether they’re changing in frequency or not. But what we definitely do know is that severity is going up.”

After natural disasters that can destroy hundreds or thousands of homes, building material prices in those markets are elevated for about six or nine months, says Robert Dietz, chief economist of the National Association of Home Builders.

In general, it’s getting costlier to rebuild homes due to supply constraints and rising material costs such as lumber prices that are also driving up insurance premiums.

Home insurance costs are rising faster in some states than others. For example, Colorado saw a 21% jump in average annual premiums for homeowners insurance from 2017 to 2020. Texas’ rates are up 18%; Virginia’s are up 14.8%; Maryland’s are up 13.4%; and California’s are up 9.6%, according to Triple-I data.

“There are some constraints with how quickly insurers can adjust their rates,” Karen Collins, the assistant vice president for personal lines at the American Property and Casualty Insurance Association, told The Washington Post. “You may have some [states] who haven’t experienced the same amount of rate increases simply because the carriers are still in that process of negotiated filing that is getting drawn out for a lengthy period of time.”

On average, homeowners spend nearly 2% of their household income on home insurance, according to an analysis by Bankrate.com.

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