The increasing frequency and intensity of catastrophic weather events are reshaping homeowners insurance in a profound way. From wildfires in California to Florida hurricanes, insurers are reassessing risks, which has far-reaching implications for policyholders nationwide. The recent January 2025 fires in Los Angeles are a stark reminder of how these events ripple through the insurance industry, affecting not just those in affected regions but also homeowners in states like Massachusetts and New Hampshire. With insights from Travis W. Hurley of Fred C. Church Insurance, this article explores the evolving landscape and provides actionable strategies for homeowners to navigate these changes.
Who Is Impacted by Catastrophic Weather Events?
In the immediate aftermath of a disaster like the Los Angeles fires, those directly affected face immense challenges, including:
Property Damage: Thousands of homes and businesses may be destroyed, leading to massive insurance claims. Initial estimates have ranged from $50-150 billion in damages.
Higher Premiums: Residents in high-risk areas often see steep increases in their homeowners’ insurance premiums, even if their property wasn’t impacted.
Coverage Issues: More worrisome is the ability to secure coverage at all or coverage for relevant risks (such as flood insurance). Not only is this a problem in the event of a disaster, but it can make a house unsaleable if a mortgage is likely. Coverage today might not guarantee coverage tomorrow. It’s become common practice for insurers to non-renew existing policies, sometimes due to pulling out of a state entirely or after demanding improvements that may seem unreasonable (e.g., replacing a 10-year-old roof that should have a 20-year lifespan). Non-renewal can force homeowners to turn to state-run high-risk insurance pools.
However, the impact extends beyond just high-risk regions. Insurance companies often spread the financial burden of claims across their entire customer base. This means that policyholders in areas far from the disaster zone—including New England—may see premium increases as insurers adjust rates to account for growing climate-related risks.
Why Does This Affect Homeowners Nationwide?
The insurance industry operates on a national scale, pooling risks and premiums across large geographic areas. When catastrophic events occur, the costs are distributed through:
Reinsurance Costs: Insurers purchase reinsurance to protect against massive losses. Catastrophic events drive up the cost of reinsurance, which is passed on to consumers everywhere. Additionally, reinsurance companies are placing significant pressure on carriers to further restrict underwriting guidelines. Travis points out that these restrictions make it more difficult to qualify for certain risk exposures, some of which may have seemed perfectly normal five to ten years ago. “For instance, recent trends include stricter requirements for home updates, such as the age of roofs and major home systems (heating, electrical, plumbing), particularly in homes built before 1940—a significant portion of New England’s housing stock.”
Rising Base Premiums: Insurers recalibrate risk models to account for the increasing likelihood of severe weather events, affecting premiums across the board. Historic inflation has also contributed, driving up replacement costs of properties and further inflating premiums.
State-Level Rate Adjustments: Some states allow insurers to factor in out-of-state claims when setting rates, broadening the impact.
Non-Renewal Practices: Insurers pulling out of high-risk areas can sometimes help keep premiums more reasonable for those in insurable regions.
7 Ways to Keep Homeowners Insurance Premiums Reasonable in Massachusetts and New Hampshire
While no one can control global weather patterns or the broader insurance market, there are proactive steps homeowners can take to manage their premiums:
1- Strengthen Your Home’s Resilience
Travis highly recommends installing low-temperature monitors and/or water leak detection sensors, which are inexpensive and highly accessible, making them an excellent risk mitigation device that anyone can easily install. You can also go a step further by installing the Moen Flo (or something like it), which allows you to control the water shut-off valve even if you’re away. It will automatically turn the valve if it detects unusually high water use and send an alert to your phone as well. This function can of course be as annoying as it is useful, so assess it against your specific needs.
You could also consider central reporting fire and burglar alarms through vendors like ADT or Simplisafe, particularly for high value homes. “Central fire alarms, in particular, are becoming more frequently required for secondary or seasonal homes and properties with replacement costs exceeding $500,000—and especially those over $1 million.”
Investing in home improvements that mitigate risk can lower premiums. Consider installing storm shutters or impact-resistant windows if living near the beach. Evaluate roofing materials like metal or architectural shingles to best suit your area. Upgrade to fire-resistant materials where possible. Consider automatic backup generators to keep the home humming along in the event of a storm.
It’s also about committing to regular and routine maintenance. Ongoing property maintenance can prevent small losses, helping you avoid claims and keeping your options open when shopping for insurance.
2- Bundle Policies
Many insurers offer discounts for bundling homeowners, auto, and other types of insurance. Travis says that “consolidating your policies can save around 10% on average in New England, with some carriers offering as much as 30%.” Even if your carrier doesn’t have all the coverages you need, they sometimes work in partnership with other insurers.
3- Maintain a Good Credit Score
Insurers sometimes use credit scores as a factor in determining premiums. Although this practice is banned in Massachusetts, it is utilized in New Hampshire. Therefore, depending on your state, a higher credit score can translate to lower rates.
4- Optimize Your Insurance Score
Have you ever wondered how insurers calculate your rate? Travis reveals that “your insurance score acts a lot like your credit score in the way that it’s the base determining factor for how insurance companies rate you as a risk profile.”
In order to determine premiums, they use a list of dozens of weighted factors that include everything from the main items you’d expect:
- Prior loss history.
- Years of continuous coverage.
- How high/low your prior liability limits are.
But there are relevant lower weight factors you might not think of:
- Marriage status.
- Aforementioned credit score.
- Your average tenure with each past carrier.
- The number of lines of coverage you have.
Each carrier will create their own weighting and factor system, which is one reason premiums may vary as you shop around. But prior loss history is certainly top on the list across the board. “Massachusetts and New Hampshire have six-year and five-year look back periods, respectively, for incidents impacting insurance scores and premiums.”
5- Shop Around but Keep Loyalty Benefits in Mind
Insurance rates vary widely between companies, particularly for the reasons just discussed. Ideally, you’d like to be the target audience for the insurer vs someone that’s considered their outlier. Periodically comparing quotes helps ensure you’re still the target audience in order to get the best rate and coverage options.
That said, Travis reminds us that “staying with the same carrier for at least 2-3 years can optimize your insurance score tied to carrier tenure and continuous coverage.” In addition, many carriers offer loyalty credits, vanishing deductibles, accident forgiveness, or grandfathered coverages that can make staying worthwhile.
6- Adjust Deductibles Strategically
Increasing your deductible to $2,500 instead of the typical $1,000 can yield immediate savings. This strategy also helps you avoid small claims that might raise premiums significantly or impact your eligibility with other insurers. For example, a $1,000-$2,500 claim can increase costs by hundreds of dollars annually and may preclude quotes from some carriers for three years. Avoiding small claims helps maintain a clean loss history, giving you more options and better rates.
7- Work with a Local Independent Agent
Independent insurance agents often have access to both local and national insurers, providing tailored recommendations based on your situation. “An independent agent’s expertise can help you navigate complex underwriting guidelines and find the best balance of cost and coverage,” says Travis.
The Bigger Picture
By understanding the interconnectedness of climate events and insurance markets, homeowners in Massachusetts, New Hampshire, and beyond can make informed decisions to protect their properties and finances. Taking proactive steps to mitigate risks, optimize insurance scores, and maintain continuous coverage are key strategies for weathering today’s challenging insurance environment. If you’re in the market for a quote, by all means support our blog contributor by reaching out to Travis Hurley today.
Powwow, LLC is a fee-only advisor. We do not accept or receive any referral fees or commission if you choose to work with Fred C Church or any other trusted professional recommended by Powwow, LLC.
