The cost of home insurance is skyrocketing across the United States, with average premiums increasing by 24% nationwide in recent years. In extreme cases, such as Utah and Arizona, premiums have jumped more than 40%. This surge is critical because insurance is typically required for homeowners to qualify for a mortgage.
The rising cost of disasters, driven by climate change, is a primary factor. More frequent extreme weather events are damaging and destroying property, while inflation is making reconstruction more expensive. As a result, insurers are raising prices and, in some cases, dropping customers to avoid significant losses.
The Impact of Rising Insurance Costs
The consequences of unaffordable insurance extend beyond individual homeowners. If people cannot secure mortgages due to high insurance costs, it can depress property values, reduce property tax revenues, and impact local governments’ ability to fund essential services like police and fire departments.
Mitigating Risks: Home Hardening and Community Efforts
One potential solution lies in homeowners and communities taking proactive measures to protect themselves. ‘Home hardening’ involves installing fortified roofs, using fire-resistant building materials, and removing vegetation around homes to reduce wildfire risks. Some states offer grants to help homeowners cover these costs and provide insurance discounts for properties that have been hardened.
However, insurers often don’t account for these mitigation efforts when determining coverage. According to Dave Jones of the Climate Risk Initiative at UC Berkeley Law, even when homeowners invest in protective measures, insurers may still refuse coverage if they don’t factor in these improvements.
The Way Forward: Rethinking Insurance and Climate Resilience
Experts emphasize that the current situation is not static; climate change will continue to increase risks. To address this, there’s growing discussion about overhauling building codes, land use policies, and reducing climate pollution. Some insurers are beginning to consider community mitigation efforts when assessing risk, but more progress is needed to ensure that investments in resilience are recognized and rewarded.
As the situation continues to evolve, communities and policymakers are exploring new approaches to managing climate-related risks and making insurance more accessible and affordable.
