The escalating threat of climate change is making home insurance increasingly unaffordable, leaving many residents on the brink of losing their coverage entirely. In Georgia, resident Bell watched in despair as a large tree obliterated his century-old home. “It’s terrifying,” he reflected, echoing the urgency felt by countless others facing similar situations.
At a recent seminar, Senator Sheldon Whitehouse, chairman of the Senate Budget Committee, raised alarms about a looming crisis for the American economy: the repercussions of climate change on the insurance industry. He warned, “As climate change intensifies, people might struggle to afford home insurance.” With homes becoming uninsurable, the ability to secure loans could be compromised, leading to a mortgage market crisis and significant drops in home values.
Diane Wolf, the Associate Vice Chancellor for Student Affairs at UC Davis, has lived in the Berkeley hills for 26 years. She recently shared the struggles her community is encountering due to climate change. “Last spring, I got a notification from the American Automobile Association (AAA) stating I couldn’t renew my umbrella insurance because my home lacked fire coverage,” Wolf recounted. In response, she and her husband quickly secured a fire insurance policy, which costs them about $7,000 a year, but soon after, AAA launched a review that necessitated a home inspection.
In California, insurance companies are increasingly enforcing home inspections prior to renewal, particularly as the state has faced 16 of the 19 most devastating wildfires in U.S. history, each causing over $1 billion in damages. Wolf noted that despite being a long-time customer, she encountered obstacles during the renewal process. The insurer pointed to various potential issues, including exposed wiring and an aging roof, which could lead to coverage denial. When she sought assistance from the state’s Fair Access to Insurance Requirements Plan (FAIR Plan), she discovered that even this basic coverage came with repair demands, ultimately costing her $60,000.
At 70, Wolf expressed, “This is a huge expense for us.” Although the insurance she managed to obtain offers limited coverage, she considers herself fortunate compared to some neighbors who faced abrupt cancellations without notice.
The insurance crisis is affecting many regions across the country, but Florida, often pummeled by hurricanes and tropical storms, is feeling the most severe impact. Residents there are now paying nearly four times the national average for homeowners’ insurance, with premiums surging about 40% over the past year and a half. The plight of Floridians underscores the grim reality of living in areas heavily affected by climate-related events.
