Does less property tax mean higher insurance?

An extremely smart person stopped by my office this week. As we discussed the meaning of life, we discovered that we had both experienced an increase in our residential insurance. 

Neither of us have had claims in years. Decades in my case. So why the big increase? Because he is way smarter than me, he began digging. 

He received the automatic 25% property tax reduction (for family residential structures and improved land up to a maximum fair market value of $1,000,000. Owner must occupy at least eight months of the year) that was passed in 2025. This reduction lowered his property tax payment by about $1,000 a year. It went from $4,200 to slightly more than $3,100. Sounds great. 

At the same time, his homeowner’s insurance was $3,400 per year. Once the property tax reduction was realized, his homeowner’s insurance we up by $1,800 per year. To be clear, his homeowner’s insurance was $3,400 per year. It is now $5,200 per year. 

He believes that is a direct result of the property tax reduction and the insurance actuaries determining that fire districts will be underfunded. That will affect our ISO rating for property insurance. ISO is a score from 1-10 assigned by the Insurance Service Office. They use it to evaluate a community’s local fire protection and readiness. 

As the chairman of the Big Horn County Fire District 2 board, I’m concerned that his conclusion is correct. As the guardian for a 95-year-old woman, I must be concerned about her property tax bills and the cost of her homeowner’s insurance. As a person of retirement age, I’m concerned for our household too. 

Are we robbing Peter to pay Paul?