Hurricane season: costly home insurance.

Title: The Soaring Cost of Homeowners’ Insurance Amidst an Active Hurricane Season

In the heart of June, the Atlantic Ocean waves welcome the arrival of hurricane season, forecasted to be “extremely active” this year, with as many as seven major hurricanes on the horizon. However, this isn’t just a weather-related concern; it’s becoming increasingly challenging for homeowners to find affordable insurance options as insurance companies grapple with the effects of inflation and the escalating frequency of catastrophic storms worsened by climate change.

Last year, insurance rates climbed 11.3% nationwide, and experts predict no relief this year. Even states traditionally considered safe from hurricane damage, such as Arizona, Illinois, and Utah, have witnessed insurance increases surpassing the national average.

For decades, homeowners insurance was a stable line of business for insurance companies. Claims typically involved single-home incidents, like electrical fires or washing machine leaks. But in recent years, there’s been a surge in catastrophic hurricanes, wildfires, and convective storms, according to Chuck Nyce, a professor of risk management and insurance at Florida State University. These storms affect numerous properties, altering the dynamics for insurance companies.

Unlike hurricanes and wildfires, severe convective storms are striking states previously thought to be relatively safe from natural disasters, driving up insurance costs. Last year was the worst year for the homeowners insurance industry in over a decade, with net losses reaching $101.29 billion, according to a report by S&P Global. Only two of the 20 largest US homeowners’ insurance companies were profitable last year.

Inflationary pressures, coupled with record-breaking natural disasters, have weighed heavily on the industry’s results. The US homeowners insurance industry experienced a staggering $61.5 billion in insured losses from the Hawaiian fire and convective storms during the year, according to an estimate from the management consulting firm Aon.

As insurance companies struggle to turn a profit, policyholders bear the brunt. Some face rate increases, while others lose their coverage altogether. Florida and California have been particularly affected, with many national insurers withdrawing property coverage due to elevated hurricane and wildfire risks. However, this trend is spreading to states like Louisiana, North Carolina, and Texas.

Property insurance is not legally mandated, but most lenders require it for mortgage holders. This leaves homeowners with mortgages in a bind if they are suddenly dropped from their insurance. Most states have an “insurer of last resort,” a state-government-backed insurance provider designed to fill coverage gaps in the private insurance market. These state-backed insurance plans can be costly or provide less coverage, said Nyce.

For those with insurance options but worried about increased costs, there are ways to lower premiums. Shopping around every couple of years to find more competitive rates and raising your deductible, the amount you pay before insurance kicks in, could help. But a proactive approach is to invest in fortifying your home, known as “hardening,” to avoid high insurance costs when the next disaster strikes. This could involve installing metal straps that attach your roof to your home’s walls and wind-resistant garage doors.

In the face of escalating insurance costs, it’s crucial to prioritize strengthening your home over aesthetics. As Aris Papadopoulos from Florida International University’s Extreme Events Institute advises, “We all love to have a pretty kitchen, pretty closets, and bathrooms, but before you do any of that, make sure your house is strong.” After all, a strong home offers peace of mind amidst the unpredictable dance of nature.