As the Earth gets hotter because of air pollution caused by human activity, the climate gets less stable and natural disasters become more common and more severe. This has led to property damage from events like wildfires and hurricanes.
In response, many insurers are pulling back, discontinuing some policies or even leaving certain areas entirely to reduce their risk of paying claims — and independent rating agency Weiss Ratings has just analyzed the impact of this tactic on coverage in various states across America.
What's happening?
Weiss is the only such ratings company reviewing insurers in the U.S. It looked at the nonrenewal rate for homeowners insurance policies by state over the last several years using official data from the National Association of Insurance Commissioners.
It was discovered that the nonrenewal rate this year is the worst in Florida, at 3.35%, compared with less than 2% six years ago. California is a close second at 3.18%, almost quadruple the rate from 2018. Overall, across the 15 states the organization examined, policies were cancelled at a rate of 2.32% in 2024, up from 0.8% in 2018.
"These surges in policy cancellation rates are shocking," said founder Dr. Martin Weiss in the press release. "You'd think insurance companies would want to keep their customers. Telling them to go away in much larger numbers is bad for the company's current business, bad for their future growth, and terrible for homeowners who often have no viable alternative."
Why is this steep increase important?
Homeowners insurance is one of the most significant purchases that American households make. It insulates the population from financial disaster. Without it, many individuals and families will lose their homes during the next crisis. It is also mandatory when buying and selling homes, so not having a policy impacts the housing market.
When insurers refuse to renew policies, homeowners have to look elsewhere, often only finding more expensive coverage options. In some cases, they may face the difficult decision of going without coverage entirely. This creates major financial risk and ruin for many Americans.
What can I do about getting insurance coverage in this climate?
While it might seem like insurers are just trying to make up for the money they are losing due to disasters, they are actually making significantly higher profits now, the analysis found.
"If asked by reporters, a knee-jerk reaction of many insurance company executives is often to blame their own customers for filing 'fraudulent' claims or complain that states don't approve 'big enough' rate increases," said Weiss. "However, they're unable to explain why the abuses have increased so markedly over the years or why some companies (large and small) have been able to do right for their customers despite everything."
For that reason, Weiss recommended looking for insurers that pay out on claims more often, thereby proving that they treat their clients better.
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