Will Homeowners Get Relief on Soaring Insurance Costs?

By Don DeBat

Financially squeezed homeowners in Chicago and across Illinois finally can look forward to some relief on soaring property insurance costs thanks to a new consumer-oriented law recently signed into law by Gov. J.B. Pritzker.

The legislation, which took years to pass, hit on a theme Democrats, who control the General Assembly, have been focused on in this election year. It is a top Democratic priority to pass bills that make goods and services more affordable for Illinoisans.

The new homeowners-insurance law prohibits rates that are “excessive, inadequate, or unfairly discriminatory,” and requires 60 days’ notice—rather than 30 days—before a renewal premium increase exceeds 10%. Nearly all states already have the ability to challenge excessive auto and homeowners’ insurance rate hikes.

However, even without a loss claim, two North Side resident investment-property owners say they were hit with the following hefty insurance-rate hikes in 2025:

• A vintage brick 4-flat owner in Lincoln Park was hammered with a 59% insurance increase to $6,500 from $4,070 for exactly the same coverage he had in 2024—and with the $10,000 deductible—even though there never has been a loss claimed at the building in 25 years.

• A vintage brownstone 6-flat owner in Old Town was slapped with a 35% insurance increase to $7,220 from $5,336 for exactly the same coverage, even with a $10,000 deductible.

The push for lower insurance rates gained momentum last summer when State Farm Insurance announced it would raise its homeowners’ insurance rates by more than 27%, citing costly repairs from weather-related disasters.

The insurance giant stated weather-related losses in other states had hurt its bottom line, including nearly 13,000 claims and more than $4.2 billion paid out to California homeowners who suffered losses during the Los Angeles-area wildfires.

In Illinois, the company complained it paid out $1.26 in claims for every $1 in premiums collected from homeowners in 2024, including $638 million in hail damage claims alone.

“It’s not asking too much to say to insurance companies: ‘If you’re telling your customers that rate hikes are necessary, you should be able to prove why,’” Gov. Pritzker said.

Billions of dollars in losses sparked by California wildfires and western states forest fires, and an unprecedented explosion of giant hurricanes, which caused flooding along the Gulf Coast and the Eastern seaboard are blamed for the lion’s share of the losses in 2025.

Meanwhile, opponents to the new law argue the measures don’t do anything to respond to the causes of higher premiums—more costly repairs, more severe weather and legal system abuse. They say the law will push Illinois toward a more rigid rate-approval system that makes it more difficult for insurers to respond to evolving market conditions.

On August 14th Gov. Pritzker signed Senate Bill 3925 into law, authorizing local home-equity assurance programs to provide financial relief to eligible homeowners whose residences are damaged by flooding.

The new law gives participating communities another tool to help families recover as the Trump administration retreats from its responsibility to provide critical relief to families impacted by natural disasters.

Because flood damage is generally excluded from standard homeowners' insurance policies, families without separate coverage can be left to shoulder substantial recovery costs themselves.

Under the new law, the Southwest Equity Home Assurance Program and the Northwest Home Equity Assurance Program can:

• Establish a temporary, three-year flood damage direct-rebate program for participating homeowners.

• Provide eligible households a one-time rebate covering up to 50% of qualifying flood-related expenses, with a maximum rebate of $1,000.

The legislation builds upon the Home Equity Assurance Act, which allows communities to establish locally administered programs that help protect homeowners against losses affecting the value of their residences.

Basement flood costs

In Chicago, one of the major insurance problems in 2025 and 2026 was flooded basements, mostly caused by the Windy City’s ancient sewer system. One Northwest Side bungalow owner whose street’s sewers failed, had a total disaster loss of $19,488.

Here is a list of costs incurred and insurance payments received by the bungalow owner to pay for the damages:

• Serve Pro cleaned up the basement flood water and debris, removed the bottom two feet of drywall and insulation, applied anti-mold spray to the walls and installed dehumidifiers. Cost: $8,991.

• The flooded furnace failed. The central-air conditioning condenser outside also had to be replaced at a cost of $8,190.

• The water-damaged clothes washer and dryer were replaced at a cost of $1,505. Mold-filled air ducts were cleaned for a cost of $575.

• A rusty sewer check valve on the front lawn, which possibly would have prevented, or minimized the flood, if working, was unfrozen and repaired for $1,800.

Total insurance company payout to the bungalow owner was $17,748. Her insurance deductible was $1,500 on an annual policy premium of $2,084.

However, her State Farm Insurance agent said: “Notice of a large premium increase likely will come in 2026, on the rollover date of your policy.”

New auto-insurance law

Gov. Pritzker also signed into law a new auto-insurance law—which was pushed by Secy. of State Alexi Giannoulias. The new law gives state regulators a stronger framework to challenge rate hikes deemed excessive.

Giannoulias’ office said the measure comes after Illinois motorists saw their rates jump 18% in 2024.

The auto-insurance law bans “excessive, inadequate or discriminatory” rates that don’t reflect actual driving risk. It gives the Illinois Dept. of Insurance more power to review rates, reject unfair hikes and order rebates to overcharged customers.

It also prevents insurers from passing out-of-state disaster costs onto Illinois motorists, and requires insurers to give customers 30 days’ notice before any renewal premium increase exceeding 10%.

“Illinois residents should be prepared for the potential impact of these new laws—higher home and auto insurance costs and fewer options for coverage,” warned a joint statement from the Illinois Insurance Assn., the American Property Casualty Insurance Assn. and the National Assn. of Mutual Insurance Cos.

“These new laws, which put that success at risk, also highlight why it is essential that all stakeholders have a seat at the table throughout the legislative process,” the statement said.

“Policies developed without meaningful input from those responsible for serving consumers risk producing unintended consequences that could ultimately leave Illinois residents paying more while having fewer choices,” the insurance-industry experts warned.

***

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.