Hurricane Francine in Louisiana, floods in the Carolinas and wildfires in California is one of the extreme weather events that have affected millions in the US over the past week. And it’s not just about the physical risk – it has a huge impact on the affordability of the house, as extreme weather continues to enter rising home insurance costs.
In some areas, housing is at great risk very expensive to insure – if private insurance is even available at all.
How much does the average person spend on home insurance?
Home insurance premiums are meant to be less than the cost of rebuilding your home after a disaster or major damage. These costs are based on a variety of factors, including the size of the home and claims history, but are also based on location – and are extreme weather events driven by climate change carry more risk from floods, heavy storms, hurricanes and heat waves, among others, the location is important more than ever.
Bankrate found that the average cost of home insurance, which covers the structure of your home if it needs to be rebuilt, is $2,285 per year in the U.S. for a policy with a limit of $300,000. But those costs are still rising.
“From 2017 to 2022, homeowner insurance premiums will increase 40% faster than inflation,” said a June report by the Bipartisan Policy Center. “… For millions of households already struggling to make mortgage payments, these monthly insurance costs are a significant burden. They can also put home ownership out of reach for potential first-time homebuyers.”
The range of homeowner insurance costs is widespread. In Vermont, Bankrate data shows people pay an average of $67 per month for a $300,000 home limit, while in Nebraska, the most expensive home insurance state, people pay an average of $471 per month — an annual policy that’s more than $3,300 above the average national.
Other parts of the insurance coverage are not included in the amount, such as other structures, personal property and loss of use, which are usually listed as coverage B, C and D, in the coverage policy. And depending on your location, you may also need a separate deductible for wind or storm damage, determined based on the percentage of your home’s coverage.
“While inflation has slowed since peaking in June 2022, insurance rates are reactionary,” Bankrate said in a September report. “Home insurance costs are still rising due to the impact of inflation on previous losses experienced by insurers, the high cost of building materials and the possibility of losses related to extreme weather in the future.”
The location of the home is important to the cost of insurance
In the US, people are at risk of earthquakes, tornadoes, floods, hurricanes, wildfires and severe storms during the seasons. In California, which, since September 17, has seen six active wildfires, the increasing risk of such occurrences has left some areas “means ‘uninsurable‘,” according to researchers at the First Street Foundation, a non-profit organization that studies climate risks. The group found that approximately 35.6 million properties – a quarter of all US real estate – face higher insurance costs and lower coverage due to the risk climate.
The combination also reduces its properties.
San Bernardino County, which accounts for six of the nation’s 10 worst zip codes for non-renewal insurance, is also one of the most at-risk for natural hazards and climate change, according to FEMA. Districts in Southern California are currently fighting the two Bridge and Line Firescombined they have burned more than 93,000 acres.
The risk of fire in California – which has also been battling historically Fire Garden for nearly two months – now it is high that both Allstate and State Farm have pause property sales and casualty coverage for new customers in the country.
“The cost of insuring a new home customer in California is higher than the price they would pay for a policy due to wildfires, higher costs of home repairs, and higher reinsurance premiums,” Allstate told CBS News.
AAA also chose not to renew some of its policies in Florida, a state that has experienced the effects of flooding and flooding. typhoon. Without a private insurance offer, rely on insurance policies provided by the government, such as the National Flood Insurance Program, to help.
This is not just a problem for coastal areas and fire-prone states. In fact, the most impactful weather events are those that are not categorized by name.
The Insurance Information Institute found in a May 2020 report that severe convective storms — thunderstorms — “are the most common and destructive natural disaster in the United States.” Tornadoes are often a product of these storms, and Nebraska, the state with the most expensive home insurance on average, was affected by five of the 10 costliest disasters in the U.S. involving tornadoes, according to the report.
There have been $20 billion in disasters across the country so far, as of September 10, with 14 involving severe weather or tornadoes.
NOAA National Environmental Information Center
As risk increases, affordability decreases
Nearly half of US homes face severe climate change threatswith an estimated $22 trillion in residential property at risk of “severe or extreme damage” from floods, high winds, wildfires, very hot or poor air quality, according to a study earlier this year by Realtor.com.
But Bankrate also found that more than a quarter of homeowners said so not financially prepared to handle the costs that come with it.
And not just homeowners. While last year wasn’t the worst year for overall U.S. insured losses due to extreme weather, it was the worst year since at least 2014 for losses due to severe storms ($59.2 billion), according to data by AON.
Tenants feel the impact as well.
Between 2020 and 2023, multifamily housing development insurance rates will increase by an average of 12.5% per year, according to a June report by the Bipartisan Policy Center.
“One affordable housing provider, National Church Residences, is seeing property insurance premiums rise more than 400% over the six years to 2023, along with higher deductibles and reduced coverage,” the report said. National Church Residences provides affordable housing and independent and assisted living for seniors.
Last fall, NDP Analytics surveyed 418 housing providers in the U.S. that operate a combined 2.7 million units, including 1.7 million affordable housing units. They found that nearly one-third are experiencing premium increases of 25% or more from 2022 to 2023. To handle these costs, more than 93% of respondents said they would need to increase deductibles, reduce operating costs and/or increase rents. More than half said they should limit or delay investment in stocks and housing projects.
How to reduce the cost of home insurance
The driver behind extreme weather events – rising global temperatures driven largely by the burning of fossil fuels – is not going away. Release continues from greenhouse gases that trap heat the atmosphere will continue to heat up the planet for thousands of years to come, even if the overuse of gas stops today, which means that there are still decades to come from a worsening climate disaster putting lives and homes at risk.
But home insurance is a game of measuring risk, and there are some things you can do to better protect your home that can help mitigate future weather disasters.
According to Massachusetts insurance agency C&S Insurance, resilient home features can lead to premium prices. Storm windows, reinforced roofs and flood barriers can all help reduce the risk of damage to your home, and therefore, your wallet.
NerdWallet said that elevating home water heaters and electrical paneldeveloping wildfire-resistant landscaping and installing fortress roofing is among the homeowners can do to reduce the impact of floods, fire and wind, respectively.
The Council on Foreign Relations, an independent nonpartisan organization, says more government regulations on where and how homes can be built could also reduce costs. The group says ending taxpayer dollars for buildings in high-risk areas and investing more in natural infrastructure, such as wetlands and trees, could also reduce the impact of storms and heat.
