As the “home insurance crisis” expands in scope, insurers have warned of liabilities exceeding a trillion dollars in one southern state, according to the Houston Chronicle.

What’s happening?

In December, Harvard University’s Joint Center for Housing Studies published a report about the home insurance crisis, opening with a jarring detail: home insurance premiums rose “approximately 20% between 2020–2023 alone.”

In January, when wildfires tore through and devastated swaths of Los Angeles, a significant amount of news coverage focused on the fact that many of those affected had then-recently been “dropped” by their insurers.

To add insult to injury, many homeowners whose policies hadn’t been canceled saw their costs skyrocket in the aftermath. California and Florida are two states typically associated with this coverage crisis, but the Houston Chronicle warned that Texans wouldn’t be spared.

It cited research published by Realtor.com on September 3, examining the impacts of higher temperatures and rising seas on housing and home insurance coverage. According to the site, a quarter of American homes face “severe or extreme risks from flooding, hurricanes or wildfires.”

As the Houston Chronicle noted, over $12 trillion in property in the United States is at high risk due to worsening extreme weather, and over $1 trillion of that property is in Texas.

Realtor.com Chief Economist Danielle Hale didn’t mince words when she weighed in on what is driving the crisis and leaving American homes uninsured, warning that a knowledge “gap” existed alongside coverage gaps.

“Climate risks are no longer a distant threat for U.S. housing — they are a present reality that put a large chunk of U.S. real estate value at risk. In many markets, the gap between perceived risk and actual risk is sizable,” Hale explained.

Why is the home insurance crisis such a big problem?

Realtor.com’s report made it clear that extreme weather is why home insurance is either too expensive or not available at all in a growing number of markets.

Moreover, the report held that many of those living in areas at high risk of extreme weather weren’t aware of the danger, and that the problem is worsening at a rapid clip.

Hurricanes, wildfires, and floods are not “extreme weather” by themselves; all three existed long before human activity began influencing our climate.

However, as temperatures skew hotter, what happens to weather is similar to what happens when gasoline is poured on a raging fire. All these weather events still occur, but when they do, they’re more destructive, costlier, and deadlier.

While extreme weather is, in essence, a clear cause-and-effect problem, Energy Secretary Chris Wright recently denied its existence.

What’s being done about it?

Following the spate of fires in January, California lawmakers responded to insurance-related issues by introducing legislation to close coverage gaps in the state.

Contacting your elected representatives can be helpful, particularly for constituents in high-risk areas. 
But understanding the key environmental issues underpinning the home insurance crisis is, as Hale observed, another important step to take as extreme weather worsens.

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