- 2,467
This one goes out to @Al3x Lee
From Newsweek
Home Insurance Crisis: Are These States Next?
The property insurance crisis weighing on homeowners in California and Florida could soon loom over other states where the risk of devastating natural disasters is growing, experts warned.
Both California and Florida, which have always been disaster-prone states, have seen an increase in the frequency and severity of extreme weather events over the past few years. Faced with growing costs and higher catastrophe exposure, several major insurers in California and Florida cut coverage, stopped issuing new policies or withdrew from the two states, leaving homeowners scrambling to insure their properties. In both states, home insurance has become harder to find, as well as more expensive.
California regulators are trying to enforce tougher measures to keep insurers from abandoning homeowners, while officials in Florida are trying to attract private companies back with "much more of a free market, open economy and let the market dictate kind of thing," Chris Schafer, senior editor for home insurance at Insurify, told Newsweek. "Neither state has really found a great solution to the problem," he added.
While these states are struggling to solve their climate-related home insurance crises, the problem risks spilling over to other states soon.
"It used to be that you had two or three 'dangerous states' and the other 47 kind of offset that," Schafer said. "But we're seeing increases in a lot of places. It's California, Florida, Louisiana. But there's also states like Colorado—where there's spillover wildfire risk—, Arkansas, and Texas—where there's humongous tornado risk," he added.
There are states where there's little risk of extreme weather events and property insurance rates have remained stable in the past few years, including Ohio and the Pacific Northwest, where premiums remain more affordable. "But the number of states where rates are increasing have skyrocketed tremendously."
The average cost of home insurance in Massachusetts is currently $1,642 per year for $300,000 in dwelling coverage, according to Bankrate—cheaper than the national average of $2,258 per year. The growing risk of blizzards, ice storms, and hurricanes is largely behind the recent increases.
In high-risk areas of Louisiana like New Orleans, insurance companies have already either gone bankrupt or stopped issuing new policies over the past few years in order to cut their losses. The average home insurance premium in the Pelican State, according to Bankrate, is currently $3,969 per year for $300,000 in dwelling coverage—nearly 82 percent more than the national average.
Bankrate found that the state faced the second-highest increase in home insurance premiums in the country last year after Massachusetts, at 14 percent.
In Texas, which is seeing higher temperatures and drier conditions because of climate change, wildfires are "a ticking time bomb" for the state's property insurance market, Steven Haynes, assistant professor of Practice, Finance and Managerial Economics at the University of Texas at Dallas, previously told Newsweek. Texans pay an average of $3,973 for $300,000 in dwelling coverage, according to Bankrate—much more than the national average.
Part of the increase in home insurance premiums in Idaho, Schafer said, it's related to the growing risk of extreme weather events hitting the state, as wildfires breaking out in California could spillover into Idaho.
"Another part is that the cost of living is increasing," Schafer said. "Idaho is becoming kind of a place where people move, especially if they leave California. They're kind of hopping a state over."
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
"What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
"What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
"What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
"What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
The problem, Haynes said, is that the snow is not accumulating in abundance. "This is leading to drought conditions. It's leading to less healthy, fire-resistant vegetation," he explained.
On top of these conditions, you have really strong winds blowing from the west over the Colorado mountain range. "It's happening more frequently in Colorado that, when you have a wildfire, wind gusts of over 60mph make that fire jump two or three miles in a matter of minutes," Haynes said.
"There have also been cases where coal and natural gas mines have ignited underground, and these are super-heating the ground in Boulder County, for example," he added. "Colorado is a place to pay attention to."
Colorado homeowners pay an average of $3,017 per year for a dwelling coverage limit of $300,000, Bankrate published.
"In these conditions, you're going to have significant fire loss," he explained. "Most of the fire loss in Oklahoma and in Kansas, though, is going to be the result of low resources. They're not very rich states. Most people don't live in the most at-risk areas," Haynes said.
"But Kansas is our breadbasket. That's where our crops are produced. And Oklahoma is very much about natural gas production. So it has wider implications for the country," he added.
From Newsweek
Home Insurance Crisis: Are These States Next?
The property insurance crisis weighing on homeowners in California and Florida could soon loom over other states where the risk of devastating natural disasters is growing, experts warned.
Both California and Florida, which have always been disaster-prone states, have seen an increase in the frequency and severity of extreme weather events over the past few years. Faced with growing costs and higher catastrophe exposure, several major insurers in California and Florida cut coverage, stopped issuing new policies or withdrew from the two states, leaving homeowners scrambling to insure their properties. In both states, home insurance has become harder to find, as well as more expensive.
California regulators are trying to enforce tougher measures to keep insurers from abandoning homeowners, while officials in Florida are trying to attract private companies back with "much more of a free market, open economy and let the market dictate kind of thing," Chris Schafer, senior editor for home insurance at Insurify, told Newsweek. "Neither state has really found a great solution to the problem," he added.
While these states are struggling to solve their climate-related home insurance crises, the problem risks spilling over to other states soon.
"It used to be that you had two or three 'dangerous states' and the other 47 kind of offset that," Schafer said. "But we're seeing increases in a lot of places. It's California, Florida, Louisiana. But there's also states like Colorado—where there's spillover wildfire risk—, Arkansas, and Texas—where there's humongous tornado risk," he added.
There are states where there's little risk of extreme weather events and property insurance rates have remained stable in the past few years, including Ohio and the Pacific Northwest, where premiums remain more affordable. "But the number of states where rates are increasing have skyrocketed tremendously."
A Crisis In The Making: Massachusetts, Louisiana, Texas, and Idaho
In Massachusetts, home insurance rates soared by nearly 16 percent in 2023 after a record number of insured natural disasters, news platform Patch reported. Last year, according to Bankrate, the state still saw the highest increases in the nation, at 15 percent.The average cost of home insurance in Massachusetts is currently $1,642 per year for $300,000 in dwelling coverage, according to Bankrate—cheaper than the national average of $2,258 per year. The growing risk of blizzards, ice storms, and hurricanes is largely behind the recent increases.
In high-risk areas of Louisiana like New Orleans, insurance companies have already either gone bankrupt or stopped issuing new policies over the past few years in order to cut their losses. The average home insurance premium in the Pelican State, according to Bankrate, is currently $3,969 per year for $300,000 in dwelling coverage—nearly 82 percent more than the national average.
Bankrate found that the state faced the second-highest increase in home insurance premiums in the country last year after Massachusetts, at 14 percent.
In Texas, which is seeing higher temperatures and drier conditions because of climate change, wildfires are "a ticking time bomb" for the state's property insurance market, Steven Haynes, assistant professor of Practice, Finance and Managerial Economics at the University of Texas at Dallas, previously told Newsweek. Texans pay an average of $3,973 for $300,000 in dwelling coverage, according to Bankrate—much more than the national average.
Part of the increase in home insurance premiums in Idaho, Schafer said, it's related to the growing risk of extreme weather events hitting the state, as wildfires breaking out in California could spillover into Idaho.
"Another part is that the cost of living is increasing," Schafer said. "Idaho is becoming kind of a place where people move, especially if they leave California. They're kind of hopping a state over."
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
Colorado As 'A Place To Pay Attention To'
Last year, Colorado reported the third-highest home insurance premium increases in the country, at 8 percent, according to Bankrate. The state has recently had significant drought conditions that are increasing the likelihood of dangerous wildfires."What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
Colorado As 'A Place To Pay Attention To'
Last year, Colorado reported the third-highest home insurance premium increases in the country, at 8 percent, according to Bankrate. The state has recently had significant drought conditions that are increasing the likelihood of dangerous wildfires."What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
Colorado As 'A Place To Pay Attention To'
Last year, Colorado reported the third-highest home insurance premium increases in the country, at 8 percent, according to Bankrate. The state has recently had significant drought conditions that are increasing the likelihood of dangerous wildfires."What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
This influx of people is bringing up prices in the state, at the same time as the cost of living has gotten more expensive across the entire country. "There are still-lingering effects of COVID-19, including an imbalance in supply and demand, and lack of access to building materials," Schafer said. "When things are more expensive to repair, insurers charge more to cover those properties, because their costs are going up at the same time."
All these states, unlike California and Florida, are generally less equipped to face violent natural disasters—and homeowners are even less prepared to shoulder the cost of skyrocketing premiums.
Colorado As 'A Place To Pay Attention To'
Last year, Colorado reported the third-highest home insurance premium increases in the country, at 8 percent, according to Bankrate. The state has recently had significant drought conditions that are increasing the likelihood of dangerous wildfires."What's happening is that snowfall is just not as common as it used to be," Haynes said. "It used to be that you could expect to get snow and it would stay until April and then it would start running off the Colorado River. But now you're getting this sort of brown snow, which is basically snow that falls, stays a little while, melts, refreezes, more snow comes," he added.
The problem, Haynes said, is that the snow is not accumulating in abundance. "This is leading to drought conditions. It's leading to less healthy, fire-resistant vegetation," he explained.
On top of these conditions, you have really strong winds blowing from the west over the Colorado mountain range. "It's happening more frequently in Colorado that, when you have a wildfire, wind gusts of over 60mph make that fire jump two or three miles in a matter of minutes," Haynes said.
"There have also been cases where coal and natural gas mines have ignited underground, and these are super-heating the ground in Boulder County, for example," he added. "Colorado is a place to pay attention to."
Colorado homeowners pay an average of $3,017 per year for a dwelling coverage limit of $300,000, Bankrate published.
Kansas And Oklahoma At Risk
Colorado's neighbors Kansas and Oklahoma also experience very strong winds, which could transport dangerous embers into their territory, sparking new fires. The two states are also seeing drier conditions, Haynes said."In these conditions, you're going to have significant fire loss," he explained. "Most of the fire loss in Oklahoma and in Kansas, though, is going to be the result of low resources. They're not very rich states. Most people don't live in the most at-risk areas," Haynes said.
"But Kansas is our breadbasket. That's where our crops are produced. And Oklahoma is very much about natural gas production. So it has wider implications for the country," he added.
