More Americans are choosing not to buy home insurance due to rising premiums, putting them at significant risk of losing their homes and belongings in case of a disaster, with factors such as inflation and climate change being blamed, and those with lower incomes being more likely to go without coverage.
Homeowners are facing challenges with their insurance policies, as extreme weather events and natural disasters are causing insurers to go out of business or increase the cost of coverage, leading to the need for homeowners to quickly find alternative options to avoid force-placed insurance and ensure their homes are protected.
The increasing risks of extreme weather events from climate change are causing insurance companies to raise rates and pull back from high-risk areas, which could potentially lead to losses for banks that rely on insurance-backed collateral for loans.
Rising insurance premiums, caused by climate change and insurers pulling out of coverage areas, will disproportionately affect low-income policyholders and hinder disaster recovery efforts in heavily affected regions.
Millions of American homeowners are facing increasing insurance costs and reduced coverage due to climate change-related risks, with properties in high-risk areas potentially becoming overvalued as insurance underprices the risk, according to a new analysis from the First Street Foundation.
The risk of insurance coverage changes due to climate-related events is high in coastal regions and is increasing in non-coastal areas, leading to potential financial hardships for homeowners.
A new study warns of a looming "climate insurance bubble" in Florida, which could result in rising insurance rates and declining property values due to the increasing risks of hurricanes and other climate-driven disasters.
A new report by nonprofit First Street Foundation suggests that a quarter of residential properties in the U.S. are overvalued in relation to their climate risk, with homes in states like California and Florida being more vulnerable to damages from extreme weather events such as hurricanes, floods, fires, and earthquakes. The number of homes likely to be destroyed by fires each year is projected to double in the next 30 years, reaching nearly 34,000 in total, according to the research. The overvaluation of properties due to climate risk could potentially have disastrous consequences for the housing market, leading to a deflation of the climate bubble.
The increase in hazardous areas, climate change, and bad policy have led to a growing number of properties in America becoming uninsurable, with insurers pulling out of vulnerable areas and homeowners facing rising rates and canceled policies.
The global risk of housing bubbles has significantly decreased in 2023, with only two out of 25 cities surveyed being at risk, down from nine in previous reports, due to rising interest rates and the end of cheap financing in the real estate sector.
A climate-risk intelligence firm has warned that some of the most overvalued housing markets in the US, particularly in California and Florida, are at high risk of climate-related damage from extreme weather events, leading to potential losses of $1.3 trillion to $2.2 trillion in a market rationalization.
Home prices have decreased in several major cities, but many remain overvalued and at risk of entering a housing bubble, according to a UBS report, with Zurich and Tokyo being identified as the most overvalued markets. UBS defines a bubble as a sustained mispricing of an asset, and factors such as price-to-income and price-to-rent ratios were used to determine the rankings. While some cities have seen a drop in prices, a housing shortage could lead to a renewed boom if interest rates fall.
Insurers are struggling to make a profit in parts of the US due to climate change exacerbating the losses caused by disasters such as fires and floods.
The U.S. home insurance market is facing a crisis as policy premiums skyrocket and private insurers withdraw from high-risk states, leaving millions of homeowners at risk of inadequate coverage.
Despite years of reforms, insurance experts and analysts do not expect homeowners insurance premiums in Florida to decrease in the foreseeable future, potentially leaving residents struggling to afford sky-high rates.
