Anyone idiot could have predicted the California insurance crises after observing the last 10 years of climate driven disasters – hell, even I did. It was basic math for me. I witnessed (and lived) through the ongoing homeowner’s insurance crisis in Florida, driven by hurricanes, flood and wind damages. After decades of hearing about California floods, mudslides, wildfires and earthquakes, I knew the same homeowner’s insurance issues would hit California.
It’s not just going to impact the coastal cities though. This crisis is going to affect the entire country. Even here in Raleigh – which is outside of the hurricane zone, not subject to earthquakes and rarely has flooding issues, we’re seeing homeowner’s insurance rates skyrocket annually.
Extreme weather causes extreme damage. Overpriced real estate valuations cause increased rates. Rampant fraud increases costs. Lack of effective government regulation makes it easier for insurers to overcharge and under deliver.
And most importantly, the insurance companies want to make money. Lots of it. They’ll bail out of states where they have high exposure – just like they did in Florida 20 years ago.
At some price point, I’ll opt out of homeowner’s insurance. I haven’t reached that point yet here in Raleigh. I was inching closer to in Florida in 2018 when I sold my home.
I try to think of it like I think of most insurance. It’s there to be used in the event of a catastrophic event. It will in no way compensate me fully for my losses, but should help keep me from taking a total loss.
I still harbor fantasies of living in some warm coastal location. Maybe someday I will – but if I do, it’ll most likely be as a renter.