Homeowners face soaring insurance premiums due to ‘climate change’

Home insurance corporations are using “climate change” as a pretext to raise premiums by up to 300%, according to several reports.

Almost 90% of homes in New Jersey’s Ocean County and 60% of homes in Monmouth County are at risk of paying higher premiums or losing coverage altogether due to “climate change,” says the research group First Street. Approximately 80% of homes in Long Island’s Suffolk County will soon struggle to find affordable insurance.

Between May 2021 and May 2022, 90% of homeowners across the country saw their annual premiums increase, reported CNBC. On average, premiums jumped by $134 and are expected to continue rising.

Homeowners in California, Florida, and Louisiana are facing the most dramatic insurance hikes due to weather. In Louisiana, Citizens Insurance Agency has increased home insurance premiums by 63% over the past year based on “growing windstorm risk.”

Another factor that allows insurers to charge higher rates in those states is diminishing competition as more companies pull out of the market. In May, State Farm — which had been California’s largest insurer — announced it would no longer be covering homes in California due to wildfires. A month later Allstate followed suit. At around the same time, Farmers Insurance pulled out of Florida due to weather.

But premiums are not the only area where homeowners are being impacted.

"As we have more natural disasters and weather-related events, what we're seeing is insurance companies adding exclusions for particular things," Public Adjuster Vince Perri told CBS News. "If you suffer a wind event, your roof will only be covered under an actual cash value which means they're only going to cover the depreciated amount."

While some insurance companies may have legitimate concerns about weather damage — such as in hurricane-prone Florida — other insurers have been known to use “climate change” to justify rate hikes.

“It is a very bad situation,” Coldwell Banker Sellers Realtor Michael Monaghan told CNN. “What insurers say goes. Even if they have flawed maps or are relying on third-party information. They think it is going to get a lot worse over time.”

Insurance companies may have been emboldened by the Biden administration, however. In June the Treasury Department published a report urging state insurance regulators to 
“continue encouraging insurers to capture more granular, consistent, comparable, and reliable data on climate-related risks.”

“State insurance regulators and federal authorities also should continue identifying relevant data that will improve the ability of insurers to quantify climate-related exposures and otherwise fill data gaps with regard to climate-related risks and the insurance industry,” the government report continued.

The problem is not limited to the US. 

In the UK, homeowners who do not live near bodies of water, forests, or cliffs are still finding that their premiums are doubling — sometimes tripling — because of global warming.

Helena Adams, who lives in a £575,000 ($716,277) three-bedroom house, received a letter in July from Esure stating that “following changes to weather patterns” her premium has more than doubled from £291 ($363) to £687 ($856). Adams lives in London, eight miles away from the River Thames or any other body of water that might rise due to “climate change.”

“About 15 years ago, a living room radiator valve leaked on the carpet and we made a claim. That is the closest to flooding or storm damage we have got,” Adams told This is Money.

Adams was lucky compared to journalist Rosie Murray-West, who was told by Esure that her premium would more than triple from £374 ($466) to £1,186 ($1,477) also due to “changes to weather patterns.” Murray-West’s home is also not particularly at risk for climate damage.

“I was sent a standard letter with no explanation for the unjustifiable price hike other than blaming the weather,” said Murray-West. “What nonsense to use global warming as an excuse to hike premiums.”

Swiftcover, a subsidiary of British insurance giant Axa, told retiree Barbara Penhallow that her premium was being increased by £364 ($453). When she spoke to an Axa representative, she was told the decision was based on a “huge range of factors” including “heatwaves, floods, unexpected summer storms and cold snaps.”

Between July 2022 and July 2023 home insurance premiums in the UK surged almost 26% on average, according to reports.