Who will buy my house if they can't get insurance
Updated: Sep 12
Climate Alpha CEO Parag Khanna is quoted in the latest BBC article covering the what's happening with American home owners. As extreme weather events multiple, home insurance providers in the US are rapidly raising rates - or in some cases, quitting the business altogether - forcing many into sever financial distress.
Continue reading for our summary of the piece or view the original article here.
Across the country, premiums are expected to rise 9% this year to an average of $1,784 nationally, after jumping 7% in 2022, according to Insurify, an insurance comparison site.
The increases are far larger in the most at-risk places, such as Louisiana, where Insurify estimates that home insurance costs average more than $5,000 annually, up more than 65% since 2021.
The crisis has forced a dramatic expansion in state-backed plans, which are funded by taxpayers and are often some of the highest cost options.
The situation has left many in the US - where, as in the UK, home insurance is typically required if you have a mortgage - facing desperate choices.
As insurance availability shrinks and premiums rise, the shock is expected to force a reckoning in the property market in the US, reducing demand for homes in the areas at most risk from wildfires, heat and storms - many of the same places that have experienced recent rapid growth, as movers seek out sun, jobs and more affordable housing.
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In a high-risk city like New Orleans, homes - traditionally the source of most Americans' wealth - could appreciate 20% to 30% slower than expected, according to Climate Alpha, a start-up that works with property firms to analyse climate risk.
"It's all non-linear, which is a fancy way of saying it's going to come at you faster and harder and more randomly than you thought," chief executive Parag Khanna says.