The Impact of Severe Weather on Insurance Premiums

In recent years, the insurance world has been facing a big problem that's affecting a lot of people's finances and homes. Why? Because we're seeing more and more bad weather like huge fires in Colorado and strong storms hitting the southeast. This bad weather is not only causing damage to homes but also making insurance for homes more expensive.

At the heart of insurance is a simple principle: risk assessment. The likelihood of a claim being filed dictates the cost of a policy. However, as severe weather events become more frequent and intense, these calculations grow increasingly complex. The result is an upward trajectory in insurance premiums, a trend that affects those in high-risk areas.

A Case Study in Climatic Consequences

The 2021 Atlantic hurricane season stands as a stark example of this new norm. Marking the third-most active year on record, it spawned 21 named storms, including Hurricane Ida. Striking Louisiana as a Category 4 storm, Ida's ferocity led to the collapse of two insurance companies, overwhelmed by the sheer volume of claims. Similarly, California's battle with wildfires has pushed insurers like State Farm and Allstate to retreat from the state's home insurance marketplace, citing the untenable combination of increasing wildfire risk and escalating construction costs.

How to Adapt Your Insurance for Rising Weather-Related Costs

Against this backdrop of uncertainty, homeowners are urged to take proactive steps:

1. Revisit Your Policy: Ensure your coverage is robust enough to withstand potential storm damage, including wind, hail, and tornadoes, particularly if these events are common in your area.
2. Consider Additional Insurance Coverage: Depending on your location and specific risk factors, additional policies, such as flood insurance, may be needed.
3. Mitigate Risks: Simple actions can make a significant difference. For instance, if you're in a forested area clear a 30 to 40-foot perimeter around your home/property. Clean out your gutters. Make sure there aren't any tree branches hanging over your roof. You could even consider replacing your traditional asphalt roof with a metal roof, because they are more durable and resistant to fire, wind, and hail. 

Consult with your Account Manager to help you identify risk mitigation strategies and recommend home improvements that could qualify you for insurance discounts.

The Path Forward for Homeowners

While navigating the evolving industry of homeowners insurance may seem difficult, awareness and preparation are key. Understanding the link between severe weather and insurance costs empowers homeowners to make informed decisions, ensuring their homes—and their finances—are protected against the unpredictability of a changing climate.

Taking steps today to safeguard your home can prevent major repair costs and lower your insurance expenses in the face of severe weather.

Stay safe out there!

Here are some resources that can help:

The National Flood Insurance Program: www.floodsmart.gov
DisasterAssistance.gov: www.disasterassistance.gov
FEMA: www.fema.gov