Hurricane Francine In Louisiana, Carolina Floods and California wildfires Just the past week has seen a number of extreme weather events that have affected millions across the U.S. And it’s not just a matter of physical risk — it’s also having a major impact on the economics of buying a home, as extreme weather continues to negatively impact home prices. Rising home insurance premiums.
In some areas, housing is at great risk. Too expensive to insure — It’s unclear whether private insurance will be available in the first place.
How much does the average person pay for home insurance?
Home insurance premiums are designed to be less than the cost of rebuilding your home after a disaster or major damage, and the cost is based on a variety of factors, including the size of your home and your claims history, but also your location and any extreme weather events. Climate Change Bring Greater risk That location is more important than ever as disasters such as floods, severe storms, hurricanes and heat waves become more likely.
According to a Bankrate study, the average cost of home insurance in the U.S., which covers the actual structure of your home if it needs to be rebuilt, is $2,285 per year for a policy with a $300,000 limit, but the cost is still rising.
“From 2017 to 2022, homeowner’s insurance premiums rose 40% faster than the rate of inflation,” a June report from the Bipartisan Policy Center said. “For millions of households already struggling to make mortgage payments, these monthly premiums are a huge burden. They can also put homeownership out of reach for first-time homebuyers.”
Homeowner’s insurance rates vary widely. In Vermont, people pay an average of $67 for a $300,000 home limit, according to Bankrate data. Meanwhile, in Nebraska, the state with the highest home insurance rates, people pay an average of $471, making annual premiums more than $3,300 higher than the national average.
These amounts do not include other insurance coverages, such as other buildings, personal property, and loss of use. These are usually listed as coverages B, C, and D on your policy. Also, depending on where you live, you may have a separate deductible for wind and storm damage. The deductible may be based on a percentage of your dwelling coverage.
“While inflation has slowed since its June 2022 peak, premiums are rebounding,” Bankrate said in a September report. “Home insurance premiums are still rising due to the impact of inflation on past losses experienced by insurers, rising construction material costs, and the high likelihood of future extreme weather-related losses.”
Where you live affects your insurance premiums
Across the United States, people face the risk of earthquakes, tornadoes, floods, hurricanes, wildfires, and severe storms in all seasons. In California, six wildfires were burning as of September 17, heightening the risk of these events and leading some areas to declare “Essentially “uninsurable”“Climate risk poses an enormous threat to the insurance industry,” according to researchers at the First Street Foundation, a nonprofit that studies climate risk, which found that about 35.6 million properties, or a quarter of all U.S. real estate, face higher premiums and reduced coverage due to climate risk.
This combination also reduces the value of those properties.
San Bernardino County, which ranks sixth among the top 10 ZIP codes in the state for overdue insurance renewals, is also one of the counties most at risk from natural disasters and climate change, according to FEMA. The Southern California county is currently: bridge and Line FireCombined, these burned more than 93,000 acres.


California’s fire risk has been impacted by a historic battle with big fires Park Fire For nearly two months, Allstate and State Farm Suspension of non-life insurance sales To new customers across the state.
“Insurance premiums for new home buyers in California are far higher than they should be due to wildfires, rising home repair costs and rising reinsurance premiums.” Allstate He told CBS News.
AAA also said it would not renew some insurance policies in Florida, where devastating flooding and inundation have been rampant. HurricaneWhere private insurance is not available, government-provided insurance, such as the National Flood Insurance Program, can help.
This isn’t just an issue for coastal regions or wildfire-prone states — in fact, the weather phenomena that have the most impacts aren’t ones that have names.
The Insurance Information Institute said in a May 2020 report that severe convective storms (thunderstorms) are “the most common and costly natural hazard in the United States.” Tornadoes are often generated by these storms, and Nebraska, the state with the highest average home insurance premiums, was affected by five of the top 10 costliest tornado-related events in the United States, according to the report.
As of September 10, there have been 20 billion-dollar disasters across the country so far this year, 14 of which were caused by severe weather or tornadoes.
NOAA National Centers for Environmental Information
As risk increases, affordability decreases
Nearly half of U.S. homes face serious threats from climate changeAbout $22 trillion in residential property is at risk of “severe or extreme damage” from floods, high winds and wildfires. Extreme heat A study conducted by Realtor.com earlier this year suggested that poor air quality in residential areas could be to blame.
But Bankrate says more than a quarter of homeowners Financially unprepared To deal with the costs that come with it.
And it’s not just homeowners who are suffering: While last year wasn’t the worst year for national insured losses from extreme weather, it was the worst year for losses from severe storms ($59.2 billion) since at least 2014, according to AON data.
Renters are also feeling the effects.
Between 2020 and 2023, insurance premiums for multifamily developments will rise an average of 12.5% ​​per year, according to a June report from the Bipartisan Policy Center.
“National Church Residences, an affordable housing provider, saw its property insurance rates increase by more than 400 percent over the six years to 2023, along with higher deductibles and reduced coverage,” the report said. National Church Residences provides affordable housing and independent and assisted living facilities for seniors.
Last fall, NDP Analytics surveyed 418 housing providers across the country that operate a combined total of 2.7 million housing units, of which 1.7 million are affordable housing. The survey found that nearly one-third of housing providers expect to increase premiums by more than 25% between 2022 and 2023. To address these costs, more than 93% of respondents said they would have to either increase deductibles, reduce operating expenses or increase rents. More than half said they would have to limit or delay investments in housing stock and projects.
How to lower your home insurance premiums
Global warming caused by the burning of fossil fuels, which is the cause of extreme weather, isn’t going away anytime soon. Heat-trapping greenhouse gases Even if we stopped overusing these gases today, atmospheric carbon dioxide would continue to warm the planet for thousands of years to come, meaning worsening climate disasters and putting lives and homes at risk for decades to come.
But home insurance is a game of measuring risk, and there are things you can do to better protect your home to reduce damage from future weather disasters.
According to Massachusetts insurer C&S Insurance, durable home features can impact premium pricing: Shutters, reinforced roofs, and flood protection can all help reduce the risk of damage to your home, which in turn can reduce the strain on your wallet.
According to NerdWallet, if you raise the temperature of your home’s water heater, Electrical Paneldeveloping wildfire-resistant landscaping and installing reinforced roofs are some of the things homeowners can do to help reduce the impacts of flooding, fire and wind, respectively.
The Council on Foreign Relations, an independent, nonpartisan organization, says that stronger government regulation of where and how housing is built would also help reduce costs. The group says that stopping taxpayer spending on building in high-risk areas and increasing investment in natural infrastructure like wetlands and trees would also help mitigate the effects of storm surges and heat waves.
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