According to an October 2024 article on bankrate.com, Nebraska ranks #1 in the country when it comes to Homeowners Insurance rate increases.

This isn’t necessarily breaking news if you are a homeowner in the Cornhusker state. However, this alarming trend has left homeowners across the state grappling with rising premiums, and the reasons behind these hikes are multifaceted.

In this blog post, we will explore the factors contributing to this trend and three specific changes affecting homeowners: increased deductibles, requirements to prove the age of roofs, and alterations in how roof claims are processed.

The Rising Tide of Home Insurance Premiums

In the last year, the home insurance landscape in Nebraska has shifted dramatically. According to industry reports, average premiums have surged significantly, outpacing national averages and placing considerable financial strain on homeowners. This spike can be attributed to various factors, including extreme weather events, rising construction costs, and increased claims frequency.

Some of these statistics include:

• Catastrophic Weather Events: 28 separate $1 Billion + loss events were reported in 2023
• The cost of building materials remains high: Material Costs have surged from February 2020-2024
• Labor Shortages are driving repair costs. There were 346,000 job openings in the construction industry as of March 2024.
• Fire Losses: Over 380,000 residential structure fires resulted in nearly $11 billion in property damage in 2022.

Specifically, Nebraska’s geography makes it susceptible to various natural disasters, including severe storms, tornadoes, and flooding. These events lead to more claims and create a cycle of rising costs for insurance companies.

Three Future Trends

So, what does this mean for current and future homeowners in Nebraska? Well, no one knows for sure, but here are three trends that we have seen as we work with our clients to sort through the options:

Higher Deductibles

The days of a $500 or even $1000 deductible for a homeowners policy are likely gone forever. If you currently have a home policy with these deductibles, a deductible change on your current policy or moving to a new company will likely mean there is no going back.

What will most likely repalce these lower deductibles from years ago will be higher wind/hail deductibles…in the range of $2,500 to $5,000. Another option that some companies have gone to is a percentage deductible for wind and hail. For instance, if your house is insured for $300,000, and your wind/hail deductible is 1%, then your wind/hail deductible would equal a dollar amount of $3,000.

Proof of Roof Year

Another trend in our office from some companies is a new requirement to provide documentation of when the roof was last replaced.

If you had a roofing company replace your roof, then you can reach out to them to provide a “Certificate of Completion”, which will state the date that the work was completed. This is a document that roofing companies are required to provide your insurance company anyway, so you can also reach out to your current insurance company to obtain a copy of this document.

If you are the DIY type, it will be important to keep copies of receipts and invoices for materials purchased to replace the roof. Pictures of the project, both before and after, would be okay, too.

Changes to Roof Settlement Payments

Replacement Cost coverage is very common with many home insurance companies. Essentially, if you have replacement cost coverage for your roof, the insurance company will pay the cost to replace it minus the deductible listed on your policy.

As stated earlier, if the damage was the result of a wind or hail loss, the deductible may be higher.

Moving forward, the year of the roof on your home may start to affect how the payout is determined.

Homes with roofs over 15 years old, no matter the condition, could have the roof settlement changed to ACV (Actual Cash Value), which takes into account depreciation and wear and tear.

Another option is a payment schedule, in which the amount paid after the deductible decreases based on the age and material of the roof.

For example, if you have an asphalt shingle roof that is five years old, the roof settlement may be 95% of the total replacement cost. When the policy renews, and the roof is now six years old, the roof settlement may drop to 93% of the total replacement cost.

Selecting a roof payment schedule offers lower premiums than roof replacement costs and ensures a better understanding of what dollar amount you will receive in the event of a loss.

Conclusion

As this situation evolves, it’s essential for homeowners in Nebraska to stay informed about their insurance policies and the factors contributing to rate increases.

Regularly reviewing coverage, understanding the implications of increased deductibles, and maintaining comprehensive records of home maintenance can help mitigate some of the financial strains associated with these rising costs.

It is also important to review your policy and discuss it with your agent to determine what makes the most financial sense. If you can save enough money for a $2,500 or $5,000 deductible, you could lower your home’s overall premium.

If the ability to put money into a savings account isn’t available right now because of other financial burdens, take the time to ask an independent agent to see what options are available. An independent agent can look at various companies to compare coverage and premiums to find the best fit for your specific needs.