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Chicago homeowners opt for high deductibles amid soaring insurance costs

Average annual insurance has spiked by $615 since 2019

Chicago Homeowners Choosing Higher Insurance Deductibles
Jeff Wingate of Guaranteed Rate Insurance (Guaranteed Rate, Getty)

An increasing number of Chicago homeowners are dealing with soaring insurance costs by opting for policies with higher deductibles, according to Guaranteed Rate Insurance.

Homeowners are opting for lower monthly payments but increase the risk of high out-of-pocket costs when making insurance claims, Crain’s reported. 

Chicago-based Guaranteed Rate Insurance analyzed 50,000 homeowners insurance policies. From 2019 to 2023, the average annual cost spiked by $615 to $1,723, with a 49 percent increase in policyholders opting for deductibles ranging from $5,000 to $10,000. That move allows for discounted premiums, potentially saving homeowners about $50 monthly.

Holding onto savings may be prudent for future catastrophic losses, but few policyholders likely follow that approach, said Jeff Wingate, executive vice president of Guaranteed Rate Insurance. Despite the majority maintaining deductibles between $1,000 and $2,500, their numbers dwindled by 17 percent over the four-year study period.

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Escalating premiums pose a pressing concern for homeowners, especially amid high interest rates and inflated home prices. In 2019, the average homeowners insurance premium stood at $1,108, surging by 55 percent to $1,723 in 2023, with a 19 percent increase occurring in that single year alone, the outlet reported.

Illinois experienced a 25.8 percent premium hike last year, which was among the highest in the nation. Factors contributing to these steep increases extend beyond natural disasters to regulatory leniency and aging infrastructure. 

While Illinois doesn’t get hurricanes and isn’t known for earthquakes, insurance rates have skyrocketed in part because Illinois is one of the most lenient states on insurance regulations, the outlet said. It doesn’t require insurance companies to get permission from the state to raise rates.

Besides that, the state does get its share of natural disasters, such as Feb. 27 when 11 tornadoes touched down near Chicago.

“Seventy percent of homeowners’ losses this year have been due to storms,” Wingate told the outlet.

—Quinn Donoghue 

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Guaranteed Rate InsuranceJeff Wingate
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InsuranceSingle-family