Home insurance in Washington State is undergoing significant changes, particularly affecting homeowners in Eastern Washington. Traditionally, Washington has been a low-claims, profitable state for insurers. However, recent wildfires have led to increased claims, prompting many carriers to reevaluate their coverage in high-risk areas.
Wildfires and Insurance Availability
The Gray and Oregon Road fires in 2023 destroyed 366 homes and resulted in over $212 million in insurance payouts. Notably, most of these homes were underinsured, with 244 claims reaching 100% of their coverage limits. This underinsurance highlights the need for homeowners to regularly review and update their policies to ensure adequate coverage.
In response to the increasing wildfire risk, insurers are reducing their exposure in Eastern Washington. Homeowners have reported policy cancellations or non-renewals, even after investing in fire mitigation measures. The Washington State Office of the Insurance Commissioner has noted a surge in complaints related to wildfire-related policy drops, indicating a growing coverage crisis in the region.
Rising Premiums and Insurer Challenges
Home insurance premiums in Washington have seen substantial increases. As of late 2024, the top 20 insurers in the state raised homeowner rates by an average of 21.7% year-over-year. This trend follows a 16.9% increase in 2023 and a 14.6% rise in 2024.
The financial strain on insurers is evident, with companies paying out more in claims than they receive in premiums. In 2023, insurers paid $1.11 in claims for every $1 collected in premiums, reflecting an 11% loss. This imbalance underscores the challenges insurers face in maintaining profitability amid increasing claim costs.
Earthquake Insurance Considerations
Standard homeowner policies in Washington typically exclude earthquake coverage. Homeowners must purchase separate earthquake insurance, either as an endorsement or a standalone policy. These policies often come with deductibles ranging from 10% to 25% of the home’s insured value and may require property inspections or specific retrofitting measures.
Claims History and Policy Renewals
Homeowners should be cautious when filing insurance claims. Submitting multiple claims within a short period can lead to policy non-renewal or cancellation. Many insurers may decline to renew coverage if a homeowner files two or more claims within seven years. Therefore, it’s advisable to file claims only for substantial losses.
Recommendations for Homeowners
- Review Coverage Regularly: Ensure your policy reflects current rebuilding costs and includes extended replacement cost coverage.
- Consider Additional Policies: Evaluate the need for earthquake and flood insurance, primarily if you reside in high-risk areas.
- Consult Local Agents: Consult local insurance representatives who understand regional risks and can provide personalized advice.
- Assess Claim Worthiness: Before filing a claim, discuss with your agent whether it’s financially prudent, considering potential impacts on future coverage.
Staying informed and proactive in managing your home insurance can help navigate the evolving landscape and ensure your home is covered! If you need a great local agent, reach out. I would love to be your resource and connect you to one.
