High interest rates have already put a damper on home sales across the country, now insurance companies are hiking home premiums enough to give home shoppers some pause.
Homebuyers are increasingly canceling contracts in flood-prone Florida or California, where wildfires have ravaged the state, according to The Wall Street Journal.
Extreme weather events have home insurance companies raising their prices or exiting certain high-risk markets altogether.
According to the Insurance Information Institute, the average home insurance premium has steadily risen over the past five years for Floridians. In 2019, the average coverage cost was $1,988. It is now about $6,000, the trade organization found.
The price of federal flood insurance, which is mandatory in certain regions of Florida, has also risen. The National Flood Insurance Program, which is government-run and provides a majority of flood insurance policies, recently raised premiums to align prices with the level of risk.
In Cape Coral, Fla., the average annual flood insurance premium for waterfront properties has continued an upward trajectory, rising from $1,791 to $4,728, according to federal data analyzed by the Journal shows.
Even so, the increase in insurance expenses hasn’t deterred Americans from moving to regions susceptible to disasters. The allure of lower taxes, more affordable housing and sunnier climates has outweighed the woes and worries of floods or fires.
Alexandra Glickman, managing director of real estate & hospitality at insurance agency Arthur J. Gallagher & Co., told the Journal that “insurance is absolutely having an impact on house purchases,” adding that it is “going to continue to happen.”
Glickman, who has over three decades of experience in commercial insurance, according to LinkedIn, said the heightened cost of home insurance premiums “is laying a damp towel” on the outlook buyers have for areas that are susceptible to disasters.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.