Rising home insurance premiums disproportionately impact seniors and homeowners with low credit scores, according to a new study from insurtech platform Matic.
Matic’s mid-year survey reviewed trends from 45,000 policies and 3.2 million quotes. It found that home insurance premiums grew an average of 4% year over year. The survey found that increasing home insurance premiums disproportionately affects those with FICO scores below 580 – as homeowners with this factor saw the largest increase in premiums at an average of 6.4%.
“In most states, an insurance score, which is partially driven by a credit rating, represents the probability of a claim being files, and affects the premium a homeowner will pay for coverage,” said Ben Madick, co-founder and CEO of Matic Insurance. “The housing market, the cost of materials, and the cost of labor were on the rise even before COVID-19.
“We’re now seeing those increases reflected in the estimated replacement cost of the home (Coverage A) which ultimately drive increases in insurance premiums, among other factors. While homeowners with lower FICO scores experienced a disproportionate increase, they are receiving better coverage and the gap between premiums and Coverage A is closing.”
The study also found that homeowners over the age of 63 are the most susceptible to overpaying for home insurance. While premiums tend to be highest for homeowners between 43 and 55 years old, premiums for seniors do not drop proportionately, Matic found. The data suggested that seniors are overpaying due to not regularly checking their policies and annual premium increases adding up over time. Matic found that seniors could save an average of $751 per year simply by monitoring, reviewing and adjusting their insurance policies.
“Many factors contribute to extensive savings,” Madick said. “Home improvements and bundling auto might play a role, but the most common occurrence is from a customer that has lived in the same house for over 20 years. Even without claims, a homeowner will likely experience a 3% to 4% increase in premiums each year. Over time, that increase is not insignificant.”
Industry studies have found that 40% of homeowners have not reviewed their policy within the last two years.
