Experts says climate change is contributing to soaring housing insurance costs
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Severe storms are becoming increasingly common across the United States, leading to soaring costs for home insurance. Hurricanes, flash floods, tornadoes, and wildfires are among the wild weather patterns drastically changing the country’s landscape. According to the National Oceanic and Atmospheric Administration, last year saw 28 weather and climate disasters, each causing over $1 billion in losses.
Travis Hodges, an insurance broker at Hub International, pointed out, “When the trends go to the extremes, all the financial modeling that the insurance companies base their rates on gets disrupted.” In some cases, costs have surged by as much as 25% nationwide. According to Bankrate.com, the average annual rate for a $300,000 home is $2,151, but in high-risk areas such as Fort Lauderdale, Florida, homeowners could be paying about $10,151 a year. Moreover, most insurance policies don’t cover flood damage, requiring a separate policy.
The increasing costs are primarily due to rising house values, labor costs, and material prices. Hodges explained, “When the losses do happen, all of the house values have gone up, all the labor costs have gone up, all of the materials have gone up.” Consequently, it costs more to repair any damage and rebuild to new building codes. To mitigate these escalating expenses, Hodges advises homeowners to raise their deductible by up to $500, potentially reducing their premium bill by 15-20%. He also recommends bundling insurance policies and shopping around to compare different rates.
