Does Climate Change Affect Your Home Insurance?

Climate Change Is Altering the Way We Buy Homeowners Insurance

Rising temperatures. Growing numbers of hurricanes every year. Flooding. Droughts. These kinds of events seem to be happening more frequently. Insurance companies are taking note and the industry is changing as a result.

How Does Climate Change Affect Homeowners Insurance?

Insurance providers are watching carefully and adapting as needed. As events happen, claims cost providers more. As a result, you can see policy premiums rising. There are other issues, and insurance companies are starting to do business differently.

• Insurance companies are developing ways to forecast weather accurately, analyzing risks down to microclimate regions.
• In high risk areas, homeowners insurance providers are charging higher premiums, larger deductibles and fewer coverage options.
• In areas prone to hurricanes, tornados, and wind and hail damage, providers are applying separate deductibles on standard homeowners insurance policies.

What Can You Do to Adapt?

Homeowners insurance providers reward people who take steps to prevent losses.

• Insurance companies provide discounts in “Firewise USA” communities where residents are proactive about preventing wildfires. Every participating homeowner learns how to avoid fire damage and then implements fire prevention methods, such as clearing property of brush, vegetation and other items that can spread fire.
• One of the incentives given to homeowners by some providers is a discount for homeowners who make their homes more ecologically friendly. For instance, customers who generate solar, wind power or geothermal energy can receive a special discount.

Changes in the Real Estate Market

Due to increasing natural disasters, fewer people are choosing to live in high-risk areas. More homebuyers are skipping that oceanfront property they’ve always dreamed of owning and moving to less disaster-prone areas. In this way they are avoiding having to frequently rebuild or repair their home while enjoying the savings they realize.

A lot of thought goes into buying the right homeowners insurance policy, and it’s important to ask the right questions. Learn more, make sure you have the right coverage and compare policies and rates before you decide which policy is a good fit.