Most people are familiar with the hurricanes that impact the southern U.S. and the wildfires that sweep through California, Colorado, and other western states. However, many are surprised to learn that Nebraska ranks among the top five states in the country for the highest homeowners insurance rates—sometimes even taking the number one spot.
So, why are premiums in Nebraska so high?
The Impact of Wind and Hail
The biggest factors driving up homeowners insurance rates in Nebraska are wind and hail. Insurance carriers anticipate that every 9 to 10 years, they’ll need to replace the roof on nearly every home they insure. In many cases, siding needs to be replaced as well. Tornadoes, while less frequent, can result in total losses, making Nebraska a high-risk state for insurance providers.
Because of this, insurers must account for the likelihood of large-scale claims, leading to higher premiums for homeowners.
Rising Construction Costs and Inflation
The surge in construction costs following the COVID-19 pandemic has further driven up insurance rates. Materials and labor have become significantly more expensive, increasing the cost for insurers to repair or rebuild homes after a storm. These higher expenses have resulted in drastic premium increases over the last few years, as carriers adjust their pricing to keep up with rising claim payouts.
Changes in Insurance Policies
In response to the increasing number of claims and rising costs, insurance companies are making changes to homeowners policies, including:
- Higher Deductibles for Wind and Hail Claims – A $5,000 deductible is now common, and many companies are implementing percentage-based deductibles. This means your deductible is a percentage of your home’s insured value, not a percentage of the claim.
- Changes to Roof Coverage – Many insurers are moving away from Replacement Cost coverage for roofs. Instead, they are adopting Actual Cash Value (ACV) policies or implementing Roof Schedules. ACV policies take depreciation into account, meaning older roofs will receive lower payouts in a claim. A Roof Schedule reduces the claim payout based on the roof’s age at the time of loss. Both changes can result in significant out-of-pocket expenses for homeowners.
- Stricter Underwriting Guidelines – Some insurers are no longer accepting policies for homes with roofs older than 10 years, limiting options for homeowners looking for coverage.
- Exclusions for Cosmetic Damage – Many policies now exclude coverage for cosmetic damage, particularly on metal surfaces such as gutters, siding, and even roofing. If the damage does not affect the function of the home, repairs may not be covered.
What Can Homeowners Do?
With insurance rates rising and coverage options changing, Nebraska homeowners should take steps to protect their properties and finances:
- Review Your Policy – Make sure you understand what is and isn’t covered, including any changes to roof coverage, deductibles, and exclusions.
- Consider a New Roof – If your roof is nearing 10 years old, replacing it before it becomes uninsurable might be a smart move. Some insurers offer discounts for impact-resistant roofing materials.
- Explore Discounts – Many insurers offer discounts for bundling home and auto policies, installing security systems, or upgrading your home to be more weather-resistant.
- Work with an Independent Agent – An independent insurance agent can help you compare multiple providers to find the best coverage for your needs at the most competitive price.
While Nebraska’s homeowners insurance rates are among the highest in the country, understanding the factors behind these costs can help homeowners make informed decisions to manage their risks and expenses.