Alabama homeowners have witnessed a notable increase in their insurance premiums recently. Let’s look at why homeowners insurance rates have risen in Alabama.
🏗️ Increased Construction Costs:
🪚Cost of Materials: Over the past 3 years, the cost of lumber has increased 35% and the price of structural steel has increased by 55% (1). Most building products have increased with inflation.
👷♂️Skilled Labor Shortage: According to the Associated General Contractors, 9 out of 10 contractors are struggling to find skilled labor. It’s estimated the US needs 342,000 additional construction workers in 2024 on top of regular hiring to meet demand. (2) As a result, wages for skilled workers have gone up.
👩⚖️ Legal System Trends: More homeowners claims are ending up in the courtrooms than ever before. This has led to claims costing more and taking longer to settle.
🌩️Severe Weather: Here in Alabama we know all about severe weather (and suspenders on our trusted weathermen!). The increased frequency and intensity of these natural disasters has increased the costs for insurers.
📈 Increased Frequency of Claims: The US has seen a big increase in the number of claims and because construction costs have skyrocketed, these claims cost more. See this chart 👇
Conclusion: The rise in homeowners insurance rates in Alabama is a combination of factors, and there is little evidence to suggest insurance costs will go down anytime soon.
Understanding the reasons behind the rate increases is the first step toward making informed decisions to protect one’s home and financial well-being. While some of these factors are beyond individual control, homeowners can navigate this time by understanding how insurers rate your home, and by working with a good insurance agent.
Email or call the Allison Insurance Team if you’d like a no-cost review of your homeowners insurance program.
📞 205-738-7444
Continue to check out our blog posts on what you can do in this time of increasing homeowners insurance premiums.
