DISASTER INSURANCEStates Beg Insurers Not to Drop Climate-Threatened Homes
In the coming years, climate change could force Americans from their homes, not just by raising sea levels, worsening wildfires and causing floods — but also by putting insurance coverage out of reach.
In the coming years, climate change could force Americans from their homes, not just by raising sea levels, worsening wildfires and causing floods — but also by putting insurance coverage out of reach.
In places including California, Florida and Louisiana, some homeowners are finding it nearly impossible to find an insurance company that will cover their property. Others have seen their premiums climb so high that they can no longer pay. Experts say the trend is spreading throughout the country as natural disasters increase.
Most mortgage lenders require homeowners to maintain insurance. Without access to coverage, millions of Americans could find themselves forced to reconsider where they live. Consumer advocates say long-overdue conversations about development in areas prone to natural disasters are being driven by property insurers, not governments.
“Insurance companies have basically become our land-use officials,” said Doug Heller, director of insurance with the Consumer Federation of America, a research and advocacy nonprofit. “In 2023, the industry suddenly seemed to wake up and say, ‘There’s climate change, forget all those times we’ve nodded our head yes and told you that you can live there.’”
As the crisis escalates, state leaders are desperately trying to convince insurance companies to stick around. States are offering them more flexibility to raise premiums or drop certain homes from coverage, fast-tracking rate revisions and making it harder for residents to sue their insurance company.
Meanwhile, a flood of new policyholders are joining state-backed insurance “plans of last resort,” leaving states to assume more of the risk on behalf of residents who can’t find coverage in the private sector.
Industry leaders note that insurance companies have been hammered by heavy payouts — last year, 28 separate U.S. natural disasters caused at least $1 billion each in damage, according to federal figures — and say they simply can’t afford to provide coverage in the areas that face the highest risk.
Disaster costs are soaring. In the last five years, there have been 102 disaster events in the United States that caused at least $1 billion in damage. In the entire decade of the 1990s, there were 57 billion-dollar events (adjusted for inflation), and in the 1980s there were 33.
