After a series of severe storms swept through the state in May of last year, insurance carriers paid out over $1 billion in claims, making it the nation’s most costly disaster of 2013.
Most insurance issues have now been settled, but many homeowners are looking at higher rates than they were paying before the storm.
Denise Belcher has lived in her house in south Oklahoma City for four years. She says she’s used to a slow but steady increase in her homeowners’ insurance. But when Belcher got this year’s renewal in the mail, she was shocked.
“Our homeowners insurance increased by 40%, which caused our house payment to go up $100,” Belcher said. “That’s a huge chunk. 40%? Your insurance goes up 40%? To me, that’s extremely high.”
Belcher is one of many Oklahomans who has experienced a spike in rates in recent years. And the fact that insurance is mandatory makes Belcher feel a little stuck.
“We need to be insured so our homes are secure. The bank requires to keep insurance on your house, and you have to keep it covered, but you have to have the insurance has to be affordable as well.”
Her new rate sits hundreds of dollars above the estimated state average of $1,500 per year, so she plans on shopping around for a lower rate soon.
But finding something similar to her prior rate could be difficult, says Insurance Information Institute President Robert Hartwig.
“Oklahoma, like a number of states in the Great Plains, has seen an uptick in catastrophic loss activity, particularly associated with tornadoes,” Hartwig said. “So this has pressured many insurers to raise rates in these particular areas to compensate for the increased risk.”
Hartwig says the state’s location, smack-dab in the middle of tornado alley, has led to the highest homeowners’ insurance rates out of all landlocked states. And local insurance companies have felt the sting of repetitive claims in recent years. John Wisecaver works for Oklahoma Farm Bureau Insurance.
“This is a very challenging state to do insurance business in, specifically homeowners and automobile because we have some of the nation's largest weather exposures, everything from tornadoes, wind, hail, in winter, ice storms. We kind of get the gamut,” he said.
Even homeowners who don’t make claims are seeing rates skyrocket. Craig Dawkins has only made one claim in the last 20 years, and it wasn’t related to the 2013 storms. This year’s renewal came back with a premium one-third higher than the previous year.
“I thought, ‘Wow. There is something going on,’” Dawkins said. “And those tornadoes we had last year were a problem, obviously, but not for me.”
“It's easy to potentially think of it as, ‘I've paid into it all these years,’” said John Wisecaver from Oklahoma Farm Bureau Insurance.
“But the purpose it is the large number of people putting money into a pool for the small portion of people who would actually need it. That's what the concept of insurance was to begin with and still fundamentally is today.”
Wisecaver says he encourages consumers to shop around and look for the best rate, but he cautions against blindly going with the lowest bidder.
Denise Belcher knows how important adequate coverage is. She had to have her roof replaced after last year’s tornadoes. But she’s nearing retirement, so the higher rate has caused her to tighten her budget more than she’d like.
“I'm at an age in my life where I should be able to afford a few luxuries and extras and stuff and this point, and I don't do that,” she said.
While Robert Hartwig from the Insurance Information Institute says it’s impossible to predict weather patterns with any certainty, he doesn’t see Oklahomans’ homeowners’ insurance rates decreasing anytime soon.
That’s why he says people should take steps to lower their rates by doing things like reinforcing their roofs and using better building materials.