Atlanta Home Insurance Increase

The Rising Cost of Atlanta Home Insurance

Georgia has been on the wrong end of heavy rate increases for almost a decade now.  Although much of the focus has been around the increases to auto insurance, it is now Atlanta’s home insurance that is seeing some of the steeper rate hikes.  Why is this?  We went on an expedition to find out and our research uncovered eye-opening statistics on both our region and the entire country.

Catastrophe Event Frequency Has Doubled

The first breakthrough in determining the reasons for rising Atlanta home insurance costs came from data compiled by an insurance company.  Munich RE, a reinsurer who tracks claim data, determined that between the year 2000 and 2017 the frequency of major weather events has doubled!  You read that right…. doubled.  If that was the only factor that changed, we would still be in big trouble as the money to pay for these claims has to come from somewhere (our premiums).  However, inflation alone has driven the cost per event up over 40% during that time period.  Add in the additional costs for new technologies and increased construction costs and it is a miracle our home premiums haven’t tripled!

The New Tornado Alley

One of the most interesting discoveries we made during our research has a very direct impact on the home insurance premiums in our local area.  As tornado researchers began tracking these events, they noticed that “Tornado Alley,” which includes states such as Kansas and Oklahoma, is not being hit as hard as the Southeast.  Although the frequency of tornadoes remains higher in Tornado Alley, the severity is worse in the Southeastern states, which researchers have dubbed, “Dixie Alley.”  These states include Mississippi, Alabama and you guessed it, Georgia, among others.  For context, Alabama averages 14 deaths annually from tornadoes while on average only 10 people die a year in Texas, Oklahoma and Kansas combined.  Part of the reasoning is that tornadoes in Dixie Alley are typically stronger and stay on the ground longer than their Tornado Alley counterparts.  This leads to greater destruction and insurance premium increases for the Southeastern states.

Good Economy = Increased Home Rebuilding Cost

The economy has been on a historic run since the end of the 2008 financial crisis.   While this is a good thing in many respects, it has produced ever increasing demand for new construction and renovations throughout the country.  In simple economics, with this demand comes an increase in labor and material costs, which drive up prices for homeowners and insurance companies building or repairing homes.  In some cases, we have seen materials such as lumber rise as much as 20% in a twelve-month period.  Other cost factors have increased significantly more than that!  One example is the cost of  top end refrigerators, which increased 130% since the year 2000 while a top end dishwasher has increased 93%.  The cumulative effect of all these increases has put a significant strain on the cost of Atlanta home insurance.

What Can You Do to Control Atlanta Home Insurance Costs?

Although there is nothing you can do to stop the rising home insurance costs in general, there are things you can do to protect your own home and save money at the same time:

• Water Detection and Shut Off System: Plumbing system failures are the leading cause of residential water losses and homes between 16-40 years old are most at risk. An automatic shut off system is the best prevention method and can also save you money on your Atlanta home insurance!
• Central Station Fire and Burglary Monitoring: Having your security system monitored is a good way to save extra premium, but the real value is having a system that may save your actual home or your life!  Make sure you discuss with a professional to install smoke detectors in less obvious places such as the attic, garage or mechanical room.
• Lightning Protection System: One lightning strike can fry all the electronics in your home or even cause the house to burn down.  These systems help lessen your risk so you don’t have to call us after a storm.
• Higher Atlanta Home Insurance Deductible: The standard home deductible that we advise has continued to rise over the years.  People used to carry a $500 deductible, but it now makes sense to carry a minimum of $1,000, 2,500 or many times even higher depending on the situation.  The reason for this is two-fold,
  1. If you practice good home protection practices, you can minimize your risk of a loss. Therefore, your higher deductible will save you more money over time than the cost of paying it should something ever occur.
  2. Because losses have been so bad, Atlanta home insurance companies have become stricter in their underwriting practices. In some cases, if you have even had one home loss in the past three years certain companies would not write you coverage.  Crazy right?  Unfortunately, that is the environment we are now in so our job is to help you manage it the best we can!

There is nothing we can do about the overall market factors pushing up Atlanta home insurance costs; but armed with this information, our hope is that you can better navigate the market to keep your home safe and premiums in check!