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Homeowners struggle to find insurance as major companies pull coverage in several states: 'We're marching toward an uninsurable future'

"We can't raise rates fast enough or high enough."

"We can't raise rates fast enough or high enough."

Photo Credit: iStock

Increasingly destructive weather is scaring home insurers out of the market in several states — and it's not just limited to the coasts. Major companies are pulling home coverage entirely in states including Iowa, Utah, Washington, Arkansas, Ohio, and more.

What's happening?

Severe weather events have always posed a risk to home insurers — but historically, those events have been relatively limited to certain areas of the country, such as California, Louisiana, and Florida.

Now, however, due to global heating and climate change, extreme weather patterns are ramping up in nearly every state. Hotter temperatures lead to drought and wildfires; warmer oceans result in more intense hurricanes; disrupted water cycles pose a high risk of flooding

Because of this, insurers find themselves in a perilous situation. After disasters forced 2.5 million people out of their homes in 2023, insurance companies were on the hook for costly repairs, leading them to lose money on homeowner coverage in more than a third of the country.

In response, companies are either hiking rates or leaving states entirely, leaving homeowners with few to no options. This is in some cases a result of legal restrictions on how much a policy can charge or be raised from one year to another.

"Climate change is real," insurance CEO Bill Montgomery told The New York Times after his company, Celina Insurance Group, left Iowa. "We can't raise rates fast enough or high enough."

Why is it concerning?

This is concerning for homeowners because, while the problem is immediate, solutions have yet to catch up. Instead, uninsured homeowners are forced into state-mandated insurance pools, where expenses are distributed amongst taxpayers — a "solution" largely seen as untenable in the long run. 

There's also concern as to how these effects will ripple out into the broader economy. The Times describes it as "a flashing red light."

"Insurance is where many people are feeling the economic impacts of climate change first," said Carolyn Kousky of the Environmental Defense Fund. "That is going to spill over into housing markets, mortgage markets, and local economies."

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And both insurers and homeowners are worried about the increasingly severe weather patterns. From wildfire risk in the West to wind, tornado, and flood damage in the Midwest and hurricane damage in the East, every region is facing a threat that's only getting stronger.

"I believe we're marching toward an uninsurable future," said Dave Jones, the former insurance commissioner of California.

What's being done?

Some companies are working to adjust their approach by raising premiums or deductibles. Unfortunately, this approach will be devastating for homeowners without enough savings to meet that deductible — sometimes leaving them with no option but to move.

States like California and Minnesota are hoping to incentivize disaster-resistant home improvements, such as fire-resistant roofs, by mandating that insurers discount rates on these homes.

But according to the Times, "Most states lack a comprehensive plan to restore the market."

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