Home insurers are increasingly pulling out of California and Florida due to rising construction costs, growing catastrophe exposure, a challenging reinsurance market, and insurance companies facing higher costs from extreme events, leading to concerns over homeowners insurance availability and costs and potentially impacting housing markets in both states.
Insurance companies are struggling to keep up with the rising prevalence of natural disasters and the potential for catastrophic losses.
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.
Frequent weather catastrophes, fueled by climate change, are causing disruptions in the home insurance market, with insurers pulling out of high-risk areas, raising prices, and reducing coverage, leading to tougher choices and higher costs for consumers.
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 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.
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.
A non-profit research group has found that nearly a quarter of all properties in the continental United States are overvalued due to a climate-insurance bubble inflated by government subsidization, with private insurers leaving risky markets and homeowners turning to state-backed insurers of last resort; policymakers should allow private insurers to set actuarially sound rates to deter reckless building and ensure the financial burden of living in high-risk areas is shouldered by those who enjoy the benefits.
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.
