Sen. Jacobson: Escrow Payment Went Up? It May Not Be Due To Higher Property Tax, But Higher Insurance Premium

We have spent much time over the past year discussing property taxes and their impact on home affordability. Clearly, property taxes will continue to have my full attention, but there are other factors that also impact home affordability costs. One in particular is the cost of homeowners insurance and the rate at which premiums are increasing.

In most cases, homeowners who carry a mortgage have their property taxes and their homeowners insurance premiums escrowed, so they are included in the monthly mortgage payment. In many cases, these premiums are out of sight, out of mind and may get overlooked. Many assume increases in their escrow payment are due to increased property tax payments. However, homeowners insurance premiums can be comparable to your property tax costs in many cases. As a result, I have initiated two interim studies to investigate the factors contributing to these costs and identify steps that can be taken to mitigate them.

Nebraska has some of the highest homeowners' premiums in the nation. One of the leading reasons for this is a large number of wind and hail claims. Over the past two years, Omaha has had large areas impacted by wind. Western Nebraska has long been affected by hail losses, often accompanied by wind damage. Our insurance costs are also affected by disasters in other states that increase claims for national and regional insurers.

Another factor is increases or decreases in the costs of performing repairs for which claims are filed. A significant increase in premiums began during the pandemic when labor and material costs skyrocketed, driving replacement costs literally through the roof. Insurance companies (and reinsurers) were taken aback by these claims. As a result, their reserves were depleted, and the need to rebuild them contributed to premium increases.

The interim study workshops will also focus on several other issues that many believe contribute to cost increases. For example, one contributor raised by insurers is the practice of out-of-area roofers convincing homeowners to assign their claim to the roofer to complete the repairs and deal with the insurer. In these circumstances, many out-of-area roofers push the limits on the damages they claim and employ aggressive tactics to displace local contractors available to do work and establish long-term relationships with local customers. In many cases, this includes suing the insurer in the name of the homeowner, even though the homeowner may not be aware that a lawsuit has been filed after the assignment. Litigation costs, such as internal administrative work, attorney fees and court costs, are expended by the insurer on top of the claim reimbursements, all of which impact premiums.

I look forward to the workshops and the viewpoints of the various interested parties that have been willing to participate. Any constructive ideas offered may result in a bill being introduced next session.

In closing, I thought I would share an update on my health. I am happy to report that I am now walking with a cane and should soon be able to walk completely on my own. I am so grateful for all the prayers and the caregivers who assisted in my recovery. I will be eternally grateful.

I want you to know that I remain focused on how best to serve you and the issues important to you. I am currently splitting my time between my legislative office, attending hearings and various meetings. The rest of my time involves attending activities in the district.

As always, I want my constituents to know your input is important to me and I will do all I can to make a difference. Please continue to reach out to me at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.

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