Will you be able to afford home insurance when you retire?

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Many people experienced home insurance rate increases of hundreds or even thousands of dollars in 2022. Inflated construction costs were a big factor, but homeowners in disaster-prone states such as Florida and California had it even worse than most homeowners. As the changing climate increases the damage from hurricanes and wildfires, the price of home insurance weighs more heavily on the financial plans of current and future retirees.

“The price of homeowner’s insurance is rising, and rising at a fairly considerable pace in places like Florida, in places like coastal Carolina, in places like Texas, that are popular with retirees,” says Robert Hartwig, professor of risk management and insurance at the University of South Carolina.  

More than 1 in 5 people living in Florida are over 65, where coverage is already expensive or impossible to get because of the failures of several insurance companies. While Gov. Ron DeSantis signed legislation in December to stabilize the insurance market, no law can reduce the frequency or severity of extreme weather. And Florida, like other states in risky areas, has done little to stop people from building in vulnerable areas, Hartwig says.

“The reality of it is that the vast majority of the increased exposure to property damage from climatic events is associated with demographics and economics,” he says. Whether in flood- or wildfire-prone areas, people continue to build in harm’s way.

Many retirement plans anticipate that you’ll spend less when you stop working. One challenge of retirement is that you have only a finite amount of money to live on. Owning a home can help stabilize your housing costs, since you don’t have to worry about a landlord hiking your rent. But fluctuating insurance costs can throw those calculations out of whack, and post-retirement sources of income such as Social Security may not keep up. For example, homeowners insurance prices increased by 12.1% over the year ending in May, while the latest Social Security cost-of-living adjustment was 8.7%.

What to do about rising home insurance costs

If you’re planning for retirement, you may have to consider how the changing climate could change your insurance costs. A state with a low income tax and affordable cost-of-living may not be as attractive when you weigh climate risk.

“It has to be a factor when someone approaches retirement and thinks about their post-retirement budget,” Hartwig says. 

Tom Balcom, a certified financial planner and founder of 1650 Wealth Management, says several of his clients have spoken to him about the high cost of insurance, with some contemplating self-insurance — saving enough money to pay for any damage to their homes themselves. “One of my clients has basically had her insurance double over the past five years and is weighing the risk of not renewing her policy,” Balcom says. 

But he warned against self-insuring, especially in Florida where hurricanes are a regular and hard-to-measure risk. You may have enough money to rebuild your house, but what if you’re liable for a fire that starts in your living room and consumes a neighbor’s house?

“In regard to controlling the expense, I have recommended that a number of clients consult with their insurance broker in order to ‘shop their rate’ and seek better terms from other insurance companies,” Balcom says. 

You can also review your policy to see whether you can drop or reduce coverage to reduce a premium. 

Another way to lower your home insurance costs is to live in a less risky area. When you’re buying a home, consider not only whether the area is flood- or fire-prone, but the home itself. Newer homes are typically built to stronger building codes and may suffer less damage in the event of a disaster, Hartwig says. 

For some people, the pull of retiring by the beach may be too strong to deny. But you should know it comes with added risk, and increasingly, added cost.

“Retirees are going to need to take into consideration the fact that higher prices for homeowners insurance, condo insurancerenters insurance, are going to be a fixture of relocation plans for retirees as far as the eye can see,” Hartwig says.


This article originally appeared on PolicyGenius and was syndicated by MediaFeed.

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Here’s how much homeowners insurance costs in each state

Here’s how much homeowners insurance costs in each state

Selecting a homeowners insurance policy is one of the more important purchasing decisions you’ll make after finding a new home.

There are a couple reasons for this: homeowners insurance protects your assets — the home itself, personal property within the home and legal and medical bills if someone is injured on your property. Home insurance is also required by most mortgage companies before they’ll lend to you.

It’s important to have a good grasp of the basics, including what is covered and what isn’t covered. But generally, homeowners insurance premiums are dependent on the state you live in, population density of your town or city, how old your house is and how much it would cost to rebuild.

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Homeowners insurance premium costs differ from state to state for a number of reasons. If a state has a lot of major cities and more densely populated areas, it’s more likely to have higher premiums, as home values are generally higher. States in areas with a higher incidence of natural disasters also generally have higher premiums than states that don’t match that criteria.

The average annual homeowners insurance premiums in 2015 were around $1,100, according to the Insurance Information Institute (III). Click ahead to find out how much the average homeowners insurance premium is in your state. 

sturti

Average homeowners insurance premium: $982

Sean Pavone/istockphoto

Average homeowners insurance premium: $810

Davel5957/istockphoto

Average homeowners insurance premium: $1,312

Getty

Average homeowners insurance premium: $986

Davel5957

Average homeowners insurance premium: $1,383

Getty

Average homeowners insurance premium: $1,411

traveler1116

Average homeowners insurance premium: $780

Getty

Average homeowners insurance premium: $1,196

Sean Pavone

Average homeowners insurance premium: $1,993

Getty

Average homeowners insurance premium: $1,152

SeanPavonePhoto

Average homeowners insurance premium: $1,014

ehabaref / istockphoto

Average homeowners insurance premium: $692

Getty

Average homeowners insurance premium: $1,033

ibsky

Average homeowners insurance premium: $983

f11photo

Average homeowners insurance premium: $919

JoeChristensen

Average homeowners insurance premium: $1,531

Getty

Average homeowners insurance premium: $1,062

Kirkikis/istockphoto

Average homeowners insurance premium: $1,945

Sean Pavone/istockphoto

Average homeowners insurance premium: $843

Getty

Average homeowners insurance premium: $982

DepositPhotos.com

Average homeowners insurance premium: $1,379

Richard Cavalleri/shutterstock

Average homeowners insurance premium: $908

pawel.gaul/istockphoto

Average homeowners insurance premium: $1,323

Scruggelgreen

Average homeowners insurance premium: $1,508

Sean Pavone/istockphoto

Average homeowners insurance premium: $1,253

TriggerPhoto/istockphoto

Average homeowners insurance premium: $1,081

Sue Smith/shutterstock

Average homeowners insurance premium: $1,360

Davel5957/istockphoto

Average homeowners insurance premium: $737

Getty

Average homeowners insurance premium: $941

DenisTangneyJr

Average homeowners insurance premium: $1,149

DepositPhotos.com

Average homeowners insurance premium: $982

Davel5957

Average homeowners insurance premium: $1,287

Eloi_Omella

Average homeowners insurance premium: $1,075

” Darwin Brandis”

Average homeowners insurance premium: $1,200

Courtesy of bismarckstate.edu

Average homeowners insurance premium: $819

Getty

Average homeowners insurance premium: $1,879

DepositPhotos.com

Average homeowners insurance premium: $643

JPLDesigns / istockphoto

Average homeowners insurance premium: $913

DenisTangneyJr/istockphoto

Average homeowners insurance premium: $1,446

SeanPavonePhoto/istockphoto

Average homeowners insurance premium: $1,284

DepositPhotos.com

Average homeowners insurance premium: $1,096

Getty

Average homeowners insurance premium: $1,149

Swarmcatcher

Average homeowners insurance premium: $1,991

DenisTangneyJr

Average homeowners insurance premium: $673

AndreyKrav

Average homeowners insurance premium: $873

Getty

Average homeowners insurance premium: $946

Courtesy of wikimedia.org

Average homeowners insurance premium: $811

Snohomish, Washington by Jasperdo (CC BY-NC-ND)

Average homeowners insurance premium: $907

Downtown Huntington, West Virginia by formulanone (CC BY-NC-SA)

Average homeowners insurance premium: $750

FierceAbin

Average homeowners insurance premium: $1,088

If you’re a renter, you’ll still want insurance to protect your belongings. Find out the average renters insurance premium in each state here

This article originally appeared on Policygenius and was syndicated by MediaFeed.org.

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Featured Image Credit: DepositPhotos.com.

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Myles Ma

Myles Ma is an editor at PolicyGenius.com.