The home insurance market in New Orleans, and across the country, is facing challenges as extreme weather events become more frequent and severe due to climate change. Homeowners like Alfredo Herrera are struggling to find affordable coverage, with insurers raising premiums or pulling out of high-risk areas altogether. As a result, homeowners are forced to pay significantly higher premiums for coverage or turn to state-backed insurers, which often offer more expensive and limited policies.
The increasing costs of insurance are driven by a variety of factors, including higher costs faced by insurers due to severe storms, increased replacement costs, and rising reinsurance costs. Homeowners like Neil Fernandes in California are experiencing premium hikes as insurers cite rising costs and increased fire hazards in the state. Limited insurance options force homeowners to make lifestyle changes and challenge assessments of their insurance coverage value, all while worrying about future price shocks and coverage availability.
In some areas most exposed to climate change, insurers are halting policy issuance altogether, forcing homeowners to turn to state-supported insurers of last resort. In places like California and Florida, insurers are pulling out of markets due to increased risks, leaving homeowners with fewer options and driving more people to state-backed insurance providers. The US Senate Budget Committee is even launching an investigation into the financial stability of Florida’s state-backed insurance company, highlighting the growing concerns over insurance availability and affordability.
Aside from climate change, rising costs of replacing homes and labor, as well as increases in reinsurance costs, are also contributing to the spike in insurance premiums. Homeowners who have paid off their homes or bought them with cash face the dilemma of choosing between the high costs of insurance or going without coverage, leading to a significant number of uninsured homes across the country. The Consumer Federation of America warns that this trend is likely to worsen unless significant investments in climate change adaptation and tighter oversight of the insurance industry are made.
Individual homeowners, like Diana Troxell in California, are feeling the impacts of skyrocketing premiums, leaving them in financial distress and uncertainty. Troxell and her husband are struggling to afford their 250% premium increase for their manufactured home and are relying on family assistance to cover basic expenses. Despite their efforts to sell their home or explore other options, they are left with few choices but to turn to state programs like the California FAIR Plan, which offer limited coverage at high costs. As more homeowners face similar challenges, they are left living month to month and unsure of how they will continue to afford their insurance.
