Allstate is warning customers their homeowners insurance premiums could be hiked more than 55% after the insurer asked the state to approve a series of rate hikes.
Allstate broke the news to customers in an undated letter that was mailed sometime after its most recent request to regulators.
It asked for an increase of 36.9% in a filing with the Department of Banking and Insurance on Feb. 14. The hike is in addition to several other increases, approved in late 2023 and early 2024, of 6.9%, 4.9% and 7.0%, it said.
“If the subsequent filing is approved for the full amount requested, when combined with the previously approved rate increase, the average homeowners policy will see a rate change of +55.5%,” the letter said. “The average condominiums policy will see a rate change of +17.6%.”
Allstate said the actual rates consumers get will vary depending on the terms of their policies and individual circumstances.
“Our payments to help New Jersey residents recover from accidents and disasters have increased significantly in recent years and we need to adjust rates to reflect the cost of providing the protection our customers depend on,” Allstate told NJ Advance Media on Thursday.
In the letter to consumers, it said the increase is needed because of inflation and because of costs “due to our catastrophic exposure (severe weather) in the state.”
The average cost of homeowners insurance nationwide in February 2024 is $1,759 per year for a policy with $250,000 in dwelling coverage, according to an analysis by BankRate.com. That’s about 23% higher than the same coverage average in 2023, it said.
“The cost of home insurance is still increasing due to the impact inflation has had on the previous losses experienced by the insurance company, the elevated cost of building materials and the future risk posed by extreme weather,” the analysis said.
The Department of Banking and Insurance said it takes seriously its responsibility to regulate the insurance industry “in a manner that promotes consumer protection and the stability of the industry,” and that insurers by law are permitted to make requests like Allstate’s.
“Any rate change must be reasonable, adequate and not unfairly discriminatory,” it said. “If the department finds that a rate request by a carrier is unreasonable, inadequate or unfairly discriminatory, the request will be disapproved, as per state law.”
A comprehensive list of other rate hike requests to the agency was not immediately available.
Allstate’s request comes after Allstate and more than a dozen companies asked for double-digit rate hikes for car insurance in 2023.
“Customers continue to get great value with Allstate and can save money by bundling home and auto,” Allstate said Thursday.
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Karin Price Mueller may be reached at [email protected]. Follow her on X at @KPMueller.
