Home insurance is becoming more expensive and, in many states, harder to find.
The culprits? Climate change, which is causing more natural disasters, and the high cost of repairing properties.
Major insurers have practically withdrawn from the Florida market, leaving homeowners with few options and paying premiums nearly four times higher than in other parts of the country. The risk of hurricanes is part of Florida’s problem.
But Florida is not the only state where natural disasters are causing insurers to exit the market.
Two of the largest national insurers, State Farm and Allstate, are no longer selling new policies for homeowners in California, partly due to the increased risk posed to homes by wildfires.
But climate change is not the only factor. Insurance companies also point to the rising cost of replacing homes, as inflation in the construction materials and labor industry has skyrocketed.
The insurance industry states that reconstruction and replacement costs have increased by 55% between 2019 and 2022. And reinsurance, the type of insurance used by insurers to limit their risks, has risen by 30% to 40% after years of losses in the sector.
The Spread of Uninsured Places
Uninsured places are growing in all 50 states, but this is especially visible in California, Florida, and Louisiana, which are likely to experience larger and more frequent disasters, such as hurricanes and wildfires.
In Louisiana, for example, 17% of homeowners had their home insurance policies canceled last year.
More and more states are looking to increase the number of state-backed insurance providers as the “insurer of last resort” for homeowners who cannot find policies elsewhere. In Florida, Citizens Property Insurance, the state’s insurance provider for the past 20 years, saw the number of policies increase by about 50% just last year, to 1.3 million, equal to 16% of the market and much more than any private insurer has ever had in the state.
Source: CNN