How to help buyers ‘know what they’re getting into’ with insurance 

Elevated mortgage rates and high home prices get the bulk of the attention in discussions about the housing affordability crisis. But skyrocketing insurance premiums are also driving up housing costs.

"Insurance pricing has been really a hard market for the past couple of years" due to natural disasters and the nation's aging housing supply, Howard Hanna Insurance Services President and COO Annie Hanna Engel said during a recent episode of Howard Hanna's The Closing Table podcast.

Joining the discussion was Marianne Hall, an agent with the brokerage, who said she used to be able to make an educated guess about a homebuyer's likely premium — but not anymore. Now there is "so much more that goes into it," she said.

Start the insurance conversation early: Before a buyer is well into the transaction, an insurance advisor should be involved to talk about a property's potential risks, Hanna Engel said.

"We want to work in really tight communication with the real estate agent early on so that the buyers know what they're getting into," she said. "The earlier we can have that conversation and start looking at the property for them and with them, the better."

Hall said she introduces her insurance contact to her clients twice — once while mapping out the transaction's proposed timeline and again when the home sale agreement is fully executed.

Know your insurance contact well: Every agent should have a working relationship with an insurance provider, according to Hall. In addition to meeting them in person, understanding "how they like to communicate and work," including whether they prefer to text or email, is important.

That knowledge will make an agent "confident when [they] pass along their phone number on how they're going to communicate with your buyers — and how quickly."

'No such thing as too much info': "I tell all of my buyers: If you do a new furnace, new air conditioner, new hot water tank, any type of mechanicals, you're replacing windows, even some of your appliances — there's no such thing as too much information," Hall said. "Let your insurance coverer know. Otherwise, how are you ever going to get discounts?"

Insurance providers are "assuming the worst," she explained, but "new doesn't have as much risk." Policy holders "have to be able to provide information to offset" rising rates.

"You're going to save money on your insurance as well as just gaining equity in your home," Hall added.

A storm's impact spreads: Environmental factors play a role in premium hikes, but a natural disaster doesn't just affect the communities it impacts directly. "Even when it doesn't occur in your market, down the line — a year or 18 months down the line — that insurance carrier does have to keep their coffers full," Hanna Engel said.

A storm in North Carolina, for example, will eventually affect insurance costs in Pennsylvania. "That really is driving it," Hanna Engel said. "Even though there's not a lot of clarity in the insurance industry to tell us that, it absolutely is."

Hope for a better 2027: Hanna Engel is "pretty confident" that premiums "will ease up a little bit" in 2027.

"Part of that is because carriers do need to write insurance, and they've had to change their underwriting tolerances slightly," she said. "But I think consumers are becoming more savvy — sellers included, our real estate agents included — on what might have to happen to the house when it gets listed to make it a better offering, including for that insurance premium."