A new study released by First Street Foundation, a nonprofit that studies the effects and risks of disasters, shows how extreme weather events driven by planet-heating air pollution are causing property insurance rates to climb.
What is happening?
The study, titled “The 9th National Risk Assessment: The Climate Insurance Bubble,” lays out how insurance rates will only grow higher as tens of millions of American homeowners’ insurance is currently “underpriced,” considering the risk they face.
“The cost of climate exposure is not simply the damage from the floods, wind, and wildfire; it also makes its way into many other connected parts of the economy, and we are seeing that now in the insurance industry and real-estate market,” Dr. Jeremy Porter, the group’s Head of Climate Implications Research, said in a statement.
Why is this concerning?
This is yet another example of how underprepared our society is to deal with the existential threats of increasingly intense storms, flooding, wildfires, and other extreme weather events.
One recent study revealed that more people moved into disaster-prone areas in the past three years than moved away from them.
At the same time, insurance isn’t just getting more expensive — some insurance companies are refusing to insure homeowners in disaster-prone areas altogether.
Farmers Insurance recently became the fourth insurance company to pull out of Florida, saying that even charging homeowners there three times the national average was too risky for them.
And in California, State Farm is no longer offering homeowners insurance to new applicants, citing the increasing wildfires.
“We are rapidly moving to a place where the cost of insurance will make the most at-risk homes effectively uninsurable,” Matthew Eby, Founder and Chief Executive Officer of First Street Foundation, said in a statement.
What can be done about it?
To prevent the extreme weather events that are making homes uninsurable from getting even worse, we must eliminate our dependency on the dirty energy sources — such as oil, coal, and methane gas — that are responsible for the overheating of our planet and turn instead to cleaner, more abundant energy sources such as wind and solar.
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