Due to increasing extreme weather events and coastal flooding, homeowners living near waterways across the globe have seen a rise in homeowner insurance premiums. One unlucky homeowner living on the Sunshine Coast in Australia recently found out just how high their yearly premium would be after moving homes.
What's happening?
Anita Lacey recently moved from one town to another on the Sunshine Coast and was shocked to discover how much more her new homeowner's insurance would cost her.
"I had no idea it would be so expensive," Lacey told Sunshine Coast News.
Lacey's homeowner's insurance for her house from a few years ago in a different area didn't cost over $3,000, but she is now paying $4,700 on her new home, which is quite the jump in costs.
According to University of the Sunshine Coast finance professor Sajid Anwar, who also spoke with Sunshine Coast News, there are many reasons for this.
"The first reason is that property values have gone up, and the second is that the cost of everything – building materials – has gone up, so that forces the insurance companies to increase the premiums," Anwar said.
The professor also acknowledged that risk assessment, particularly flood risk, factors into the premium equation.
Why are rising insurance premiums concerning?
Insurance premiums continuing to rise will make it more difficult for people to own homes. Furthermore, in some coastal areas, insurance companies have simply dropped coverage altogether, which means that when a hurricane or heavy rain hits and homes are flooded, homeowners are entirely on the hook for damage-related costs.
Once insurers drop coverage of specific areas or people simply can't afford to live there, more people may move inward and away from the coasts. This will increase inland populations, possibly making the cost of homes and home insurance there rise.
Considering that the continued use of dirty fuels boosts the amount of heat-trapping gases in the atmosphere, which are responsible for driving weather to further extremes, this issue is likely only to worsen.
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Less than 10 years ago 👶 What's being done about rising insurance premiums in Australia?
According to the Sunshine Coast News report, the Australian Insurance Council has encouraged people in the region to try to keep homeowner costs down by comparing policies and premiums before committing to an insurance plan.
Meanwhile, Anwar said that insurers, the building industry, and the government all need to come together to mitigate the risks of flooding by flood-proofing developments.
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