US homeowners now face soaring home insurance prices resulting from the increasing frequency of climate-related disasters, with the recent LA wildfires and expected hurricanes and serious storms.
High-risk area inhabitants are paying more. From 2018 through 2022, residents in the top 20% of climate-risk locations paid 82% more in premiums compared to those in the lowest-risk zones.
This increase is putting a huge dent in the wallets of many families, forcing some to be unable to afford cover at all while others lost their policies altogether. Disaster-prone states such as Florida and California have created climate crises that hamper insurers from operating effectively, per The Guardian.
Many are canceling new policies or leaving these areas altogether. In 2022, more than 10% of insurance policies were canceled in over 150 zip codes considered high-risk. This could risk homeowners facing financial ruin after natural disasters. The wildfires of Los Angeles, for example, are said to be California's possible most expensive fire scenario yet, and could further increase rates or even encourage more insurance companies to leave the state.
Climate Crisis to Curb Housing Interest
California former Insurance Commissioner David Jones warns the climate crisis is fueling an "insurance crisis" that makes it harder for Americans to secure affordable coverage. According to AEI, insurance becomes a stark indication of the failure in taking climate crisis seriously. Jones calls for swift transition away from fossil fuels and to curb further worsening impacts of climate change. States are developing government-sponsored insurance programs to fill the void of private carriers, but these programs strain taxpayer coffers.
In Florida, deregulation attempts to attract more carriers have led to sky-high rates for consumers without enticing companies to return. Similar issues are now happening in the Midwest and Gulf Coast as extreme weather events are becoming more common.
The implications of these rising costs extend beyond insurance. Many Americans may find it harder to secure mortgages, as coverage is a requirement for home loans. Without action to address the root cause—climate change—the financial and housing systems could face growing instability, leaving families with fewer options for protection against future disasters.
Originally published on vcpost.com
