By Don DeBat

28-Dec-24 – Chicago’s North Side bungalow and “Ma-and-pa” apartment owners complain they are overwhelmed with a tsunami of rising insurance costs that hit in 2023 and 2024.

The lofty insurance increases, which come on top of Chicago’s soaring North Side real estate taxes, add another layer of operating cost expenses.

Experts predict that sharply higher property tax assessments – scheduled to hit in August 2025 when the second installment of 2024 tax bills arrive – along with soaring insurance costs will financially burden property owners.

Apartment landlords say these catapulting costs will have a major impact on budgeting for spring 2025 apartment rent increases, which could hit double-digit levels in some lakefront neighborhoods.

A spot survey by The Home Front revealed the following examples of hefty building fire-and-liability insurance premiums this year:

Lincoln Park. A shocked owner of a vintage red-brick, mixed-use four-unit building recently saw his insurance bill zoom a whopping 48.3 percent to $4,014 from $2,706 in 2023. The commercial policy carries a $10,000 deductible.

Old Town. On December 1, 2024, the owner of a historic red-brick six-flat saw the insurance bill jump a hefty 36.7 percent to $5,336 from $3,902 in 2023. One nit-picking potential insurer refused coverage on the well-maintained building because it had vines growing on the facade. The policy carries a $10,000 deductible.

Logan Square. A greystone four-flat owner was surprised when his 2024 insurance bill rose 23.2 percent to $4,809 from $3,909 in 2023. Photo by 606 Vision

After shopping around, the resident owner found an insurance company willing to write a new, more affordable policy for $4,070 – a savings of 15.3 percent. The new policy carries a $2,500 deductible.

North Lincoln Square. On January 25, 2025, the owner of a yellow-brick four-flat will see his insurance bill rise 11.1 percent from $3,012 in 2023 to $3,347. The commercial policy carries a $5,000 deductible.

Edgebrook. On December 10, 2024, the owner of a modest three-bedroom single-family brick ranch home received a 2025 insurance bill for $1,975, up 30.5 percent from the $1,513 paid in 2024. After shopping around, the homeowner received a quote for comparable insurance from another company for $1,311. The basic residential homeowner’s policy carries a deductible of $1,500.

None of the properties surveyed has had a claim in the past two decades.

Extreme weather is driving up insurance costs

The Home Front reached out to several insurance company executives to ask about the state of the market. Virtually all pointed to “climate change” as the cause for a shift in insurance costs nationwide.

Hurricanes, wildfires, tornados, and earthquakes may not be hitting Chicago’s North Side, but Windy City home and apartment owners are paying a share of the disasters from coast to coast. Meanwhile, hundreds of Chicagoans are still struggling with water damage from flooded basements caused by heavy 2024 spring rains.

“The insurance industry is dealing with massive losses from wildfires in California, tornados in the Midwest, and hurricanes and flooding in Florida, the Carolinas, and along the Gulf and East coasts,” a Chicago insurance agent said.

(Right) Damage from an F2 tornado in Lapeer, Michigan, in 2012. Photo by Benjamin Simeneta.

There’s no simple solution to the climate change problem. A combination of sweeping economic trends – from labor shortages, inflation, higher reinsurance, and rebuilding costs – along with more costly and uncertain extreme weather events simply are driving up premiums, experts say.

What is worse, insurers are passing these soaring costs to consumers with higher rates and more restricted coverage. In some states, insurers have stopped issuing new policies altogether. There, risk-prone areas are now referred to as “insurance deserts.”

Also, the federal government has been slow to approve expanded emergency FEMA payouts to help property owners rebuild their lives and properties.

(Left) Damage in New York caused by Hurricane Sandy in 2012. Photo by Leonard Zhukovsky.

According to AM Best, a global credit rating agency, underwriting losses among property insurers in the United States totaled $47 billion in 2022 and 2023 alone. As a result, property insurance premiums have risen by more than 30 percent since 2020.

Another trend is that thousands of Americans are continuing to move to more risky areas that are more vulnerable to severe storms.

Generally, policyholders everywhere routinely subsidize losses, even if residents who reside in the riskier zip codes pay the most.

Another new trend in the AI-driven insurance market is that rates are often set via algorithms. Most agents don’t even bother to put feet on the ground to tour the property, which they view via satellite or an internet-based subscription service.