Homeowners all over the country could soon feel the financial impact of the devastating California wildfires. 

As insurance companies grapple with the rising costs of natural disasters, they are looking for ways to protect themselves. This could mean raised premiums and reduced coverage for homeowners in states such as Iowa.

What is happening? 

Wildfires in California, already a significant challenge for residents there, may have a surprising impact on people across the country. Cedar Rapids’ KCRG reported that experts in the Hawkeye State are predicting that the fires could lead to increased homeowners insurance costs. 

This could be caused by the prevailing practice of reinsurance, wherein insurance companies buy policies to protect themselves from catastrophic losses. Claims from disasters including the wildfires — which have been estimated at more than $100 billion in damages, per KCRG — can drive up the cost of reinsurance. 

Ed Faber, a Cedar Rapids insurance agent, told KCRG that Iowa’s insurance market is the toughest he’s seen in 13 years, with companies raising rates and reducing coverage. 

Why is this concerning? 

Extreme weather events such as wildfires are becoming more severe and frequent because of pollution caused by burning gas, coal, and oil. This traps heat and directly contributes to Earth’s overheating, with the impact not confined to just wildfire-prone areas. 

KCRG observed that events including Iowa’s 2020 derecho caused billions of dollars in damages and pushed some insurers to leave the state. As reinsurance costs rise, consumers in Iowa and elsewhere are left to foot the bill. 

Additionally, Iowa Insurance Commissioner Doug Ommen highlighted another issue: inexperienced out-of-state adjusters who bog down claims, delaying relief for residents after storms. 

What’s being done about it? 

Efforts to address these challenges are being undertaken, as KCRG detailed. In Iowa, smaller mutual insurance companies are merging to spread the risk and maintain financial stability. 

Ommen is also urging legislative action to ensure that insurance claims are processed efficiently by trained professionals who understand local laws. 

On a larger scale, reducing our reliance on dirty energy and transitioning to cleaner, more affordable energy sources such as wind and solar can slow Earth’s overheating and mitigate extreme weather.

Individually, homeowners can upgrade to storm-resistant roofing or plant fire-resistant landscaping to reduce risks and lower insurance costs. Organizations including the Insurance Institute for Business & Home Safety offer guidance on how to make properties more resilient to natural disasters.

The solution starts with collective action — because no matter where you live, the effects of extreme weather are closer to home than you might think.

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