It used to be that places like Florida and Louisiana stood out as high risk locations with higher insurance rates. Add a few Northeast Frankenstorms into the mix, however, and that’s bound to change. What does this new storm trend signify for the real estate industry? Well, for one thing, higher homeowner insurance rates in the Northeast and likely a negative affect on the sales market as well.
The Insurance Information Institute has come out with a remarkable prognosis that Hurricane Sandy caused more insurance costs than the historic 9/11 destruction did. Insured losses from Hurricane Sandy are expected to be in the range of $25 billion, according to global reinsurance firm Munich Re. If this ends up to be true, then that would surpass the $24.6 billion that private insurers paid following the destruction of the World Trade Center, outlined Robert Hartwig, president and economist at the Insurance Information Institute. But, that’s not all. This will also have a dramatic effect on New York’s historically low insurance rates.
Northeast insurance rates to rise
In a video interview, Robert Hartwig explained how one storm alone would not increase rates. However, the fact that three serious storms that have effected the Northeast in the last 14 months will definitely have consequences with regard to present relatively low insurance rates.
“Insurers are not allowed by law to recoup past losses, but what they are allowed to do and what they need to do to obviously remain financially strong and so that they’re there for the next time an event like this strikes is to charge a rate that reflects the risk.”
Home inspectors don’t have much work when people can’t afford houses and don’t buy them. High insurance costs are certainly a factor in this equation. People often choose companies like Geico because they draw from a pool of low cost insurance providers in order to find the best possible insurance rates. It definitely pays to shop around for the best possible insurance rates before you make your choice. Though costs are rising, some rates are a lot lower than others. One thing is certain, check to see how well the company handles actual claims before committing.
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