'Don’t know what’s going to happen': Insurance companies rapidly abandoning homeowners

19 December 2024

Millions of homeowners across the country are grappling with a growing problem: Their insurance companies are simply refusing to cover their property.

In a Thursday report, the New York Times delved into the increasingly common occurrence of insurance companies informing homeowners that they would not be able to provide coverage due to the prevalence of severe and catastrophic weather events. The Times reported that since 2018, roughly two million Americans have seen their insurers drop their contracts as a response to wildfires, hurricanes, floods and other events.

New information obtained by the Senate Budget Committee shows the size, scale and scope of how many insurance policies have been dropped in thousands of U.S. counties. The Times even built an interactive website allowing visitors to see exactly where insurance coverage has dropped. While some of the most affected counties are in coastal states like California and Florida, there are multiple states across the country where insurance companies have also bailed on homeowners due to severe storms and sporadic fires.

"The climate crisis that is coming our way is not just about polar bears, and it’s not just about green jobs,” said committee chairman Sen. Sheldon Whitehouse (D-R.I.) during a Wednesday hearing. “It actually is coming through your mail slot, in the form of insurance cancellations, insurance nonrenewals and dramatic increases in insurance costs.”

According to the Times, the growing pattern of nonrenewals has been "exacerbated by climate change." As the global temperature continues to increase, it will inevitably lead to the destabilization of polar ice caps and a resulting rise in sea levels. This not only means that residents of coastal areas will eventually be displaced, but that summers will be hotter, winters will be colder and storms will be wetter. In October, Hurricane Milton dropped 18.54 inches of rain on the St. Petersburg Albert Whitted International Airport in just 24 hours, compared to just over two inches of rain over a month's time in a typical October.

The Times reported that last week, Silver City, New Mexico resident Richard Zimmel received a nonrenewal letter from Homesite Insurance informing him that the company would be dropping coverage on his home due to increased wildfire risk. His agent, Shelley Scarborough, reportedly tried to get Zimmel a policy with State Farm, Travelers and other companies that also declined to provide a policy. Eventually he was able to get a smaller company to cover his $725,000 home, though his monthly premium jumped by approximately 33%.

"I just don’t know what’s going to happen to the town if this keeps happening," Scarborough told the Times.

Florida in particular is the hardest-hit by insurance company nonrenewals out of all 50 states. The Times reported that in the wake of Hurricane Ian in 2022, nonrenewals more than doubled on average across the state (full disclosure: This author is a licensed flood insurance adjuster who worked Hurricane Ian claims in 2022). In Glades County, Florida, one in six homeowners' policies were not renewed in 2023, which is an increase of more than 3,400% from 2018.

Many Florida homeowners affected by Hurricanes Helene and Milton this year were also caught off-guard by limitations included in the National Flood Insurance Program (NFIP) policy, which is funded with money appropriated by Congress. One of the lesser-known provisions of the NFIP policy is severe coverage restrictions for elevated homes built after their community's flood insurance rate map (FIRM) was issued. Any home whose lowest floor is above ground level is considered elevated, and anything below that mark is subject to post-FIRM elevated restrictions.

Additionally, the Federal Emergency Management Agency (FEMA) has a rule in place requiring homeowners tear down their homes and rebuild them at a higher elevation if their home suffered damages exceeding 50% of its total value. And because the NFIP's maximum policy limit for a residential property is just $250,000 for building damages ($100,000 for contents damages), a homeowner may not be able to afford rebuilding costs even if they had the maximum allowable amount of coverage.

“I’ve been living here for 17 years,” Tampa resident Candace Blackburn told WFLA in October. “My property taxes are about $9,000 and if I knock it down, they’re going to be $22,000 a year. They could tell us to knock it down, but then we’re not going to be able to stay.”

Click here to read the Times' report in its entirety, and click here to visit the interactive site to see how insurance nonrenewals are affecting your state (subscription required).

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