‘Only going to get worse’
Homeowners insurance is becoming increasingly unaffordable for the average American as extreme weather conditions worsen and insurance companies withdraw from high-risk areas. Many homeowners feel that even if they buy a home, they cannot afford to maintain it.
What’s going on?
The lack of affordable homeowners insurance in California and Florida affects both new and existing homeowners. Real Estate News. Last year, 13% of real estate agents in California reported that at least one sale failed because the buyers were unable to obtain insurance. This is more than double the rate in 2023.
California’s temporary moratorium on insurance cancellations for homeowners in wildfire disaster areas ends in January. The end of this raises fears that more people will lose coverage.
The risk to the FAIR Plan, the state’s public last-resort option, has doubled in less than two years. The program recently made a request. 35.8% interest increase. This was in response to insurance company concerns about its ability to pay claims after a major disaster.
“It is very likely that more insurers will withdraw from parts of California, and this insurability crisis will worsen in 2026.” in question Patrick Blandford, founder of property insurance company Green Shield Risk Solutions, told Real Estate News.
Florida is facing a similar crisis.
Insurance companies began abandoning the state after a series of devastating hurricanes between 2017 and 2024 caused billions of dollars in damage. This pushed hundreds of thousands of people into the state-backed Citizens’ Property Insurance Corporation.
A. latest investigationBut ProPublica found that Citizens won more than 90% of disputed claims in arbitration. State-run plans may impose additional fees on all policyholders to cover shortfalls.
Why is this important?
Hurricanes, floods and wildfires are becoming more intense and expensive because of our changing climate
The insurance industry’s inability to adapt to the increasing frequency of disasters disrupts traditional risk models. This causes insurers to withdraw from high-risk areas.
Insurance has become even less available, leaving homeowners to foot the bill when insurance is available in their area. They have to pay higher premiums for less coverage and limited financial protection.
The situation is even worse for low-income homeowners.
Using credit scores to determine rates is illegal in California. But in states where it’s legal, like Florida, insurers can use credit scores to set rates. People with lower credit scores may pay nearly $2,000 more per year for the same coverage as their neighbors.
“The insurance industry enlightens us by saying homeowners are pricing their insurance policies to reflect climate risk.” in question Moira Birss is a senior fellow at the Climate and Society Institute. “Climate change is causing dramatic changes… but insurance companies are penalizing poverty rather than proactively helping reduce risks.”
What is being done about this?
Some policymakers are calling for tighter oversight of insurance pricing and investments in durable housing and infrastructure. California passes bills in October Reorganization of the FAIR Plan.
For now, progress is limited and experts warn the crisis could spread across the country as extreme weather increases more unpredictable.
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