Climate Change is Quickly Making Home Insurance a Luxury Item

As climate change accelerates, home insurance doesn’t just cost more. It’s getting harder to find at all.

The national average rate for home insurance has risen 20% from last year to $1,428 annually, The Wall Street Journal reported Monday. And even those skyrocketing fees don’t always guarantee a full reimbursement: Some insurers are opting out of renewing a policy for their clients because of impending severe weather.

Risky Business

About 12% of US homeowners don’t have insurance. Of those folks, many have skirted coverage for financial savings — about half of the uninsured have annual incomes of less than $40,000, per a 2023 study from the Insurance Information Institute.

While most people with a mortgage are required to have insurance through a lender, people who own their properties outright have more leeway. Some people just opt to leverage their savings to buy a new property if disaster hits. And they’re wondering if it makes sense to even purchase costly premiums to cover disasters that may or may not happen:

• People often buy coverage they don’t need for peace of mind. Only 22% of homeowners told the study that they were at risk of flooding, but 78% of the overall group bought flood insurance.
• On the West Coast, earthquakes are the biggest danger and account for 31% of insurance risk.

Rising tides: Some insurers are pulling out of areas prone to disaster, causing premiums to rise. Farmers Insurance left Florida in July, citing climate change. In Florida, the annual property insurance premium is about three times the national average. The company also began limiting new policies in California the same month. In Hawaii, some insurers are already considering charging higher rates following the Maui fires that killed at least 115 people earlier this month.