Americans Face $1 Trillion Drop In Availability Of Home Insurance

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Wildfires in the area around LA have proven that home insurance availability has dropped considerably around the country. The rising financial risk because of disasters means more expensive insurance for residents in threatened areas. In some cases, insurance is not available at all.

Bloomberg has analyzed the residential insurance issue. “In a webinar with journalists last month, David Burt of Delta Terra Capital argued that US homeowners’ wildfire and flood risks are underinsured by $28.7 billion a year. As a result, more than 17 million homes, representing nearly 19% of total US home value, are at risk of suffering what could total $1.2 trillion in value destruction.”

Researchers can look well beyond California and its wildfires and mudslides caused by storms from the Pacific. Wind damage and hail have caused an increased insurance rate in the middle of the country.

The greatest evidence of the climate’s effect on rates is homes along the Gulf of Mexico and southern parts of the US which are adjacent to the Atlantic Ocean. Hurricanes Milton and Helene not only damaged the west coast of Florida. They flooded areas as far inland as western North Calorinal and spawned tornadoes that hit well east into Florida toward Palm Beach.

The problem in Florida is more severe than the rest of the nation, but shows what may be coming for other regions. Home insurance prices have risen so high that some people cannot afford their homes. In the most severe cases, home insurance is not available at all. Mortgages usually require home insurance, so in parts of Florida, home prices have plunged and inventory has surged.

What will Los Angeles home insurance problems look like in future years? Florida is a perfect example.