Chances are Hurricane Isabel will bolster the homeowner insurance industry's argument for yet higher premiums next year.

Isabel could trigger the 41st major disaster the Federal Emergency Management Agency declares this year. National disasters, along with 16 emergencies and 33 federal fire management assistance efforts FEMA also declared this year are getting part of the blame for an average 8 percent hike in homeowners insurance premiums next year, up from the average 7 percent increase policy holders endured in 2002, according to the Insurance Information Institute.

Keep in mind, the figures are averages. In areas where disasters, emergencies and fires occur more often, home owners are all to aware that they have and will continue to suffer much higher increases.

Due to increased catastrophe severity, insurers have paid out more than $100 billion in catastrophe-related losses since 1990, about $700 million per month, says the New York-based institute, a nonprofit insurance information organization sponsored by the property and casualty insurance industry.

Catastrophes include well-known events such as Hurricane Andrew on the East Coast in 1992 and the Northridge earthquake on the West Coast in 1994, but also hundreds of smaller disasters associated with tropical storms, tornadoes, wildfires, hail, ice and snow.

"Homeowners insurance rates in many parts of the country continue to rise because of the extraordinary costs associated with paying these claims," said Robert Hartwig, senior vice president and economist for the institute.

The industry cites a litany of payouts.

Between 1990 and 2002, home insurers paid out, on average, $1.17 in losses and expenses for every $1 they earned in premiums.

In 2002 alone, home insurers paid out $3.5 billion more in losses and expenses than they received in premiums. In 2001, home insurers lost $7.3 billion, the second worst year on record (the highest is 1992, which included Hurricane Andrew and produced losses of $11.5 billion).

Losses in the homeowners insurance line over the past four years (2000 through 2003) are estimated at $17 billion, approaching the level of insured property losses from the September 11 terrorist attack.

But it's not just the disasters.

The industry also blames American Dreamers for demanding ever larger homes -- new or improved -- and the related growing cost of building materials.

Approximately 41 million homeowners added to or improved their homes between 2001 and 2002, the industry says. In 1999, the most recent year for which the insurance industry says annual figures are available, an estimated $25 billion was spent on home improvements.

The Joint Center for Housing at Harvard University actually tracks the number quarterly and says the number is nearly five times as high -- $122.3 billion over the past four quarters, ending in the second quarter this year.

"Part of the increase reflects choices more homeowners are making. People are taking advantage of record low interest rates and are moving into new homes or making additions to their existing homes in near record numbers," he said.

"These upgrades and additions are pushing up insurance costs. People expect their premium to stay the same, but they don't realize they have more house to insure," he added.

Critics, including Americans for Insurance Reform (AIR), argue the industry is making consumers pay for its bad investments and risky policy writing habits.

The economic burden on consumers has come not only in higher premiums, but also in reduced coverage, canceled policies and insurance coverage denials. California's Department of Insurance, for example, reported a 71 percent rise in claims during the past year -- from 1,891 to 3,230 -- submitted by home owners who were denied insurance, had their policies canceled or could not renew their coverage. The department said many complaints even came from people who only made inquiries about their coverage.

The industry says premiums rise more for older homes, homes nearer coasts and natural and weather hazard zones and homes with a insured loss history. Poor credit risks are also likely to pay higher premiums, the industry says.

Newer homes, homes further from hazard zones, homes equipped with security devices and homes with limited insured loss histories cost less to insure. Homeowners with better credit ratings are also likely to pay lower premiums.

Experts also advise:

Published: September 18, 2003

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.