Home insurance premiums are rising as Americans flock to weather-ravaged states
Why it matters: Americans are increasingly moving to high-risk areas.
Research establishes a clear link between climate change and an increase in extreme heat, flooding, wildfires and sea level rise along the United States coast.
The risk is greatest in the Sun Belt region, which is experiencing rapid growth, but Americans are moving directly into dangerous areas. Hurricane Ian alone killed more than 150 Floridians, knocked out power for 2.6 million residents and left Florida with a bill of nearly $113 billion in its wake.
Many new residents cite the cost of living as a major factor behind their move, but home insurance costs there are rising faster than the national average, meaning homeowners should brace themselves for sticker shock.
In Florida, the average home insurance premium in 2019 was $1,988. Today it is $2,714 – up from $726.
Background: Florida and Texas saw the largest population growth in 2022.
Florida grew by more than 318,000 new residents in 2022, representing a population increase of 1.9 percent last year – the largest increase in the country. Texas, with more than 230,000 new residents, was close behind.
Colorado, where home insurance costs have risen 41 percent over the past eight years, added 5,376 new residents last year, representing a half percentage point increase in population. In South Dakota, 8,424 new residents moved to the sparsely populated state in 2022, while insurance costs have risen 39 percent since 2015. In dry, sunny Arizona, where nearly 71,000 new residents moved in by 2022, costs rose 28 percent.
Conversely, states that lost significant numbers of residents saw insurance rates rise much more gradually. New York lost the most residents in 2022 — nearly 300,000 residents — but saw home insurance rates rise just 17 percent, several points below average. Louisiana, West Virginia and Illinois, which took the next three spots in terms of population loss, also saw slower increases.
California bucked the trend in several ways. Despite being ravaged by wildfires and extreme storms in recent years, home insurance rates there rose just 25 percent, below the rise in other coastal states. California lost 343,230 residents last year, representing a 0.3 percent decline.
What’s next: Rising costs may force Americans to forego risk protection.
With two out of three homes in America already underinsuredskyrocketing prices may entice homeowners to cut even further on disaster coverage, putting them at significant risk in severe weather.
They may also forego additional coverage they need more than ever. Although mortgage lenders typically require homeowners to have home insurance, most policies do not cover flooding. With tight budgets, Mr. Hosfield expects more homeowners to opt out of flood damage insurance. “And that puts them in a pretty bad spot,” he said.