Effects Of Climate Change On Insurance

As climate change jeopardizes the world with more natural disasters, it’s becoming extremely expensive to insure homes ⁠— and it’s only expected to get worse.

Natural disasters are occurring more frequently, and they’re causing more loss than ever before. In 2021, the US experienced a deep freeze, wildfires, flooding, tornado outbreaks, and other severe weather conditions – costing billions of dollars. The uptick in inflated climate events, combined with the increasing costs to rebuild, labor shortages, and “demand surges” after natural disasters have resulted in higher homeowners’ insurance premiums.

According to a Policygenius report, 90% of US homeowners saw premiums leap in the last year, costing an average of $134 more per year – an average increase of 12.1% nationwide.

Moreover, according to experts, erosion and rising sea levels are rising concerns for clients interested in coastal properties. When an individual considers buying a home along a beach, there are constant questions about flood risks and the cost of insuring the property. Clients may ultimately choose another home depending on the answers.

Nevertheless, owners may inadvertently purchase or own in flood-prone areas. A report stated by the Federal Emergency Management Agency identifies that the number of properties at risk for flooding nearly doubled in the last year. This makes flood insurance an absolute necessity for the family houses. Standard homeowners’ insurance policies don’t cover flooding, but protection is available through FEMA or private coverage, which may be required by mortgage lenders.

Furthermore, even though wildfires are covered as part of the typical homeowners’ insurance coverage, policy premiums in fire-prone areas have also become more expensive. If you move into an area that’s susceptible to wildfires or flooding, the cost goes up significantly because the carrier is passing that on to the consumer. Therefore, regardless of where you live, it’s crucial to do your research before purchasing a property.

Current homeowners may ask their insurance provider about discounts for taking steps to mitigate possible damage from climate events, such as storm-proofing their homes. Individuals may also save money by shopping around and bundling home and auto policies. As someone wise once said, “homeowners insurance is no longer a “set-it-and-forget-it” type of thing.” Climate change is real, and we all must prepare ourselves to carry its burden or make significant changes to our daily lives in order to stop this catastrophe from accelerating.

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