As extreme weather events become more frequent and severe across the United States, homeowners in disaster-prone states are grappling with soaring insurance premiums and limited coverage options.
Major insurers like Allstate and State Farm have ceased renewing policies in states vulnerable to extreme weather conditions such as California and Florida, leaving residents to seek coverage from other providers at significantly higher costs. Last year, AAA also opted not to renew certain policies in Florida due to the state’s increased exposure to powerful storms and coastal flooding.
Homeowners rely on insurance to mitigate the financial burden of property damage resulting from accidents and adverse weather conditions. However, insurers are withdrawing from certain states citing the heightened risk of extensive damage from floods, hurricanes, and wildfires, which makes coverage financially unsustainable.
In response, remaining insurers are hiking premiums. Travelers Insurance, for instance, recently received approval from California state regulators to raise homeowners’ rates by an average of 15.3%. This adjustment will affect over 320,000 Travelers policyholders in California, reflecting the company’s efforts to align pricing with evolving climate risks.
Acknowledging the impact of climate change, Travelers stated in regulatory filings that the rate increase was necessary to address the escalating risks faced by customers.
According to Quadrant Information Services, the average annual cost of homeowners insurance in the U.S. stands at $2,153, with Florida topping the list at $6,366 and California averaging $1,452. However, homeowners often face even higher premiums after switching insurers, as previous policies may have excluded coverage for wildfire or flood damage.
Matthew Eby, founder and CEO of First Street Foundation, highlighted that homeowners transitioning to new insurers often discover they were underinsured, resulting in significantly higher premiums reflecting the true risk profile.
While Californians and Floridians are particularly affected, homeowners in other states are also experiencing insurance challenges. A January survey by Deloitte revealed that residents in 19 states, including Louisiana, South Carolina, and Texas, are encountering reduced coverage options and escalating insurance costs.
Despite these challenges, some insurers are rewarding proactive homeowners who fortify their properties against disaster risks. In Florida, for example, certain insurers offer discounts to policyholders who strengthen roofs, secure shutters, and reinforce garage doors against hurricane-force winds.
As extreme weather events continue to strain insurance markets, homeowners are facing tough decisions and rising costs in their efforts to protect their properties from natural disasters.
