It’s one of the most bittersweet messages you can get: a sterile form letter telling you you’re getting dumped. And when it comes from your insurance company, it’s clear it’s not them—it’s you. Even if you’ve always picked up the check, never made a claim, and kept your house in order, they think you’re too much trouble to handle.
There may be some cold comfort in knowing you’re not alone: The US is exploding with insurance relationship drama.
california, Thousands of residents have already received notice this year that their insurers no longer want them as customers. Big companies like State Farm and Allstate have stopped signing new policies in California, while others have has left the state entirely.
Progressive insurance is excluded 100,000 homeowners Florida from their roll in April. Louisiana legislators Vote to make it easy Insurance companies to drop their customers, even as the company has Thousands have already passed.
And if you still have a policy, it’s getting more expensive. Across the United States, home insurance rates An average increase of about 20 percent Between 2021 and 2023. Without this insurance, homeowners face losses if a hurricane hits or a wildfire sweeps through. And if they still pay off the house, the lender can Foreclosure on property If coverage fails.
That’s a lot of people packing up and leaving. in Florida, One in three residents According to data released last month by Redfin, their insurers have dropped or are planning to move.
At the root of all this discontent is that insurers are struggling to stay afloat as the risks they must protect against are being driven in part by climate change. As average temperatures rise and disasters reach greater extremes, loss levels continue to rise, making parts of the United States uninsurable.
“We cannot stabilize the insurance market without dramatically reducing our climate risk,” said Carolyn Kowskywho studies insurance as associate vice president for economics and policy analysis at the Environmental Defense Fund.
There are ways to navigate through these rough patches, but going through an insurance breakup is a little different than a normal breakup, you know. Here’s what you need to know.
What can you do if you are not in good hands or your good neighbor is not there
An alternative per the guidelines of the Consumer Financial Protection Bureau (CFPB). Cancellation of home insurance: Ask your insurer to reconsider. You don’t even have to Hold a boombox Outside of your insurance agent’s office — just call and ask why you’ve been excluded and if there’s anything you can do to get them to reconsider, like installing a fire alarm or upgrading fixtures.
For the most part – Federal flood insurance The main exception is insurance companies are regulated at the state level, and state insurance commissioners limit what their policies must cover and how much they can charge customers.
But insurers are profitable businesses, and if they pay more than they earn, can’t raise premiums to cover the difference, or reduce their coverage, they have few options other than pushing their riskiest customers off their rolls.
If your insurance company won’t cover you, you can shops around For alternatives. Many states have set up public companies to provide coverage. They are intended to be insurers of last resort, offering much more expensive policies that cover less. But in states like Florida, they have become Largest property insurerAnd even they are Struggle to stay solvent.
If you live in a state where even some second-rate options are disappearing, there are some emerging alternatives to the traditional model. one Parametric insurancewhich can quickly distribute money to people affected by a specific predetermined disaster such as a fire or storm.
Unlike traditional indemnity insurance policies that pay out on a scale of loss, parametric insurance pays a fixed amount regardless of loss. You don’t submit receipts and an adjuster doesn’t come look at your roof; Instead, a homeowner can claim a certain amount of money based on objective facts surrounding the disaster.
Upside is a quick payment that you can use as you see fit after a severe weather shock. The downside is that disaster losses can easily exceed specified payouts, so you’re on the hook for what’s left — which is why parametric policies don’t meet mortgage insurance requirements.
If you can’t get an insurance policy that satisfies your bank, the lender can take one and make you pay for it. This is called Mandatory-place insurance. It protects the bank’s stake in the mortgage, not your investment, and that’s usually it Too expensive than a policy that you can get on your own.
The inevitable result with all these measures is that you will pay more and often get less to protect your home. That’s the dark reality of the current insurance landscape: If you can’t afford it, you’re on your own.
Solving insurance plays requires addressing the underlying issues
The main problem with the US insurance crisis is not with insurers or consumers here but with the fact that, due to various factors, losses are increasing and overall risk is increasing.
“When you have more storms, more fires, more of anything that can cause insurance companies to pay, it drives up costs,” according to a CFPB spokesperson. “But on top of that, there’s also the effect of inflation and the fact that if you have a house, if it’s destroyed today, it’s more expensive to rebuild than it was five years ago.”
More people are moving to coastal flood-prone or wildfire-prone areas, so when waters rise and flames move closer, more property is at risk. Many of these properties are also rising in value, creating a recipe for increased insured losses
The insurance industry’s struggles are an unmistakable symptom of a warming planet, but the effects go far beyond whether you can afford a home to whether a place is livable at all. And while they may not suffer the greatest financial losses, poor and historically marginalized communities bear the most lasting wounds of a disaster.
“You cannot financially engineer your way out of very high risk levels; You just have to minimize the risk,” Kouski said.
This is not something that a person can do on their own. Reducing climate risks demands large-scale action to adapt to changes already underway, alongside global efforts to curb greenhouse gas emissions. This requires action by governments and the world’s largest corporations.
For a separate purchase for a home, the CFPB says It’s time to add climate risk School districts, recessed lighting and granite countertops are among the factors influencing your decision about where to buy. pay attention flood zone And Fire Hazard Map.
It’s not a guarantee, but it can be the best way to reduce the chances of an insurance company breaking your heart.
