What Should Investors Do if Insurance Prices Keep Rising?

On The Market

BiggerPockets

Investing, News, Education, Business

4.8 • 858 Ratings

🗓️ 15 August 2024

⏱️ 39 minutes

🔗️ Recording | iTunes | RSS

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Summary

We’re currently in a home insurance crisis. Everyone (except for Henry, apparently) is feeling the sting of home insurance prices rising significantly year after year. Some investors have seen their homes’ insurance costs double or triple over a few years. This is making it harder not only to protect your property but also to keep your cash flow. What do you do, and can anyone save us from this home insurance crisis? Today, we’re discussing something too big to ignore: your home insurance bill. Premiums are rising fast across coastal states and are starting to creep inland. In this episode, we’re talking about why home insurance prices have gone up so much and so quickly, the state governments actively working to get premium prices down, and what investors MUST do now to limit the price hikes coming down the road. We’re also exploring state-offered insurance programs that help homeowners whose policies have been dropped. Can the government come in and fix our insurance premium problems before it’s too late, or will rising prices lead to home price corrections as affordability suffers? In This Episode We Cover 2024’s home insurance crisis and why premium prices are rising so fast The states with the highest risk of insurance price hikes and what’s causing them Government intervention and how some states are trying to limit rising prices Whether or not higher insurance prices will cause home prices to correct in at-risk areas What investors must do NOW to keep their insurance premiums reasonable Whether people will start fleeing states with the highest insurance costs and move to more affordable areas And So Much More! Links from the Show Join the Future of Real Estate Investing with Fundrise Join BiggerPockets for FREE Find Investor-Friendly Lenders See Dave at BPCON2024 in Cancun! Dave's BiggerPockets Profile Henry's BiggerPockets Profile Kathy's BiggerPockets Profile On The Market 218 - These “Subtle Risks” Could Have Astronomical Impacts on Real Estate Expenses w/John Sheffield Learn How to Run the Numbers BEFORE You Buy with Dave’s Book “Real Estate by the Numbers” Jump to topic: (00:00) Intro (02:52) California Wildfires (06:03) Where Insurance Isn't Exploding (08:48) Why Insurance Prices are Rising (10:38) State Regulations Limit Price Hikes (13:38) Check Your Policy NOW (19:07) Effects on Home Prices (23:44) Should the Government Step In? (31:51) What Should Investors Do? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/on-the-market-243 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email advertise@biggerpockets.com. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Insurance premiums have risen 33% since the beginning of 2019, which is way faster than the rest of inflation.
0:09.2	That is difficult for investors to deal with, but the question is what happens if the cost of home insurance keeps climbing across the country?
0:18.3	Over time, what would that mean for home values and how should you as an investor
0:22.2	protect your investments regardless of what happens? Today, we're going to be digging into this topic.
0:33.4	What's up, everyone? It's Dave. Welcome to On the Market. Today I have Henry Washington and Kathy Fecky, who might be the least insurable person I know on the show today.
0:45.3	True. Kathy, you live in a place that's just like famously no one wants to insure you, right?
0:51.2	Yeah, it's crazy. It's really been an issue the last few years. I live in
0:56.8	Southern California. There was a huge Malibu fire. Hundreds of homes were burned, and these were not
1:03.2	low-cost homes. So, you know, yes, we've seen insurance go up and many people get dropped. So this is a
1:10.4	really important topic.
1:11.8	Well, we're going to dig into your plight more over the course of this show. Welcome, Henry.
1:17.8	I actually was reading an article preparing for this and it said that Arkansas is one of the
1:21.9	better markets for insurance. So congratulations on that. You can contrast Kathy here today.
1:30.0	We are seeing rates come up,
1:36.0	but they're up from what would be considerably low for California. All right. Well, I want to talk more about Arkansas later, but we'll get into that in a little bit. The point of today's
1:41.2	episode is all about home insurance. If you haven't heard, it's been super
1:45.7	vile tile, it's going up, and it varies a lot state by state. We're going to get into that as well.
1:51.9	And we've seen the headlines of folks who have abruptly lost their insurance or had their costs
1:56.3	skyrocket. I have a friend who actually had his primary triple in just two or three years. And these issues
2:04.6	just used to not really exist that much. Like as an investor, I don't know if you guys agree,
2:09.1	but I used to just not even think about insurance. There's just like something that went up like
2:12.6	two or three percent every year. And then you just kind of like sign the check. And that was it.
	...

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