Homeowners face nightmare scenario after major insurance company goes belly-up: 'How do you do that to people?'

Hurricanes leave devastation in their wake, and at least one insurance company has gone broke rather than try to pay the homeowners insurance claims that it owes, according to Grist and Verite News. 

What's happening?

FedNat Insurance Co. looked good on paper, but it wasn't prepared for Hurricane Ida. It was one of seven insurance companies in Florida and 11 in Louisiana that went bankrupt in 2021 or 2022 following a number of natural disasters. 

That resulted in people living in homes that had been destroyed because they couldn't get the claim money they were owed. One family had to gut their living room after the storm, only to never receive the money they needed to put it back together again. Jennifer Bye, the owner of that home, told Grist: "How do you do that to people? How do you insure people in the South, take all of these premiums, and then just belly-up?"

Why are rising insurance costs important?

Insurance costs are going up, and companies are going out of business for a lot of reasons, including the fact that climates around the world are shifting. The United Nations has noted that burning fossil fuels such as oil, coal, and gas is a major contributor to this problem. Other causes include cutting down too many trees and consuming too many goods. 

Per the New York University School of Global Public Health, these shifts are connected to worse storms and other natural disasters, including wildfires and hurricanes. So, rising insurance costs are one result of the changing climate. Insurance companies are also leaving disaster-prone areas and dropping the types of coverage those homeowners need the most. 

What's being done about the changing climate and its human costs?

The Byes are still waiting on more recovery money after they hired lawyers and filed a lawsuit, according to Grist, though if and when they will get it is up in the air. Some states are developing laws to better deal with situations like this one so families aren't left high and dry after a disaster they couldn't control but did prepare for via insurance.

As individuals, learning more about the climate and how it's changing can help us understand our own situations and advocate for the people around us.

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