(The Center Square) – Illinois residents can expect to pay more for property insurance premiums this year according to a recent report, citing a 20-to-30% spike since the onset of 2022.
As reported in The Wall Street Journal, Illinois is one of six states with the steepest increases. Tornado-prone Illinois has joined extreme weather targets like Texas and California on the list that was compiled with info from S&P Global Market Intelligence.
Putting the situation into perspective for The Center Square was Brooke Kelley, assistant vice president of state government relations for American Property Casualty Insurance Association.
“We’ve seen an increase in tornadoes in addition to the rising cost of inflation,” she said.
With inflation at a 40-year high, she said that building and repair costs are high, and that is having an impact on insurance costs across the nation.
“We live and work in more expensive homes and buildings and hazard-prone areas,” Kelley said.
When disaster strikes, these homes and buildings are often more costly to fix or rebuild. For instance, Kelley said single-family residential construction costs have risen 25% for construction materials and 30% for construction labor since the start of the pandemic.
“Right now, insurers all over, to include Illinois, are paying out more in claims than they’re collecting in premiums,” she said.
Typically, Kelley said Illinois runs in the middle of the road when it comes to property insurance premiums, even though there’s the major city of Chicago in its midst. She described the competitive climate resulting from more than 200 insurers doing business in the state as good for the consumer.
Kelley also clarified a common misconception about who pays for disasters in other states. She noted that Illinois is not sharing the burden of extreme weather events in other states.
“Sometimes there is some confusion like as if somebody in Illinois is paying for somebody in Florida, and that’s not the case,” Kelley said.
Besides shopping around, if property owners want to save money on insurance, Kelley said one of the best ways is mitigation. This means taking steps to reduce the risk of an undesirable event.
