Insurers are increasingly denying homeowners insurance or raising rates in high-risk areas due to climate change disasters. This leaves many unable to get a mortgage.
Areas most impacted include hurricane-prone coastal cities and wildfire hotspots like California. Some insurers have fully exited these markets.
State Farm will stop writing new homeowners policies in California as of May 2023. Other major insurers have left Florida entirely.
Climate change is causing more frequent flooding due to sea rise and intense wildfires during droughts and heatwaves.
From 2010-2020, the U.S. saw over $600 billion in climate disaster losses. This has been financially devastating for insurance companies.
Insurers are acting to curb losses by raising premiums 3x in some high-risk areas of Florida and requiring much higher deductibles.
In the highest risk zones, homeowners insurance has become impossible for many to obtain before buying
Experts urge homebuyers to get insurance quotes before making offers, to ensure coverage is affordable.
As a last resort, state-run insurers like Citizens Property Insurance in Florida are an option but have much higher rates.
This crisis threatens homeownership dreams in many disaster-prone areas. Without risk mitigation or new insurance solutions, many will be locked out of the housing market.