The report from Redfin highlights the widespread impact of rising home insurance costs and coverage changes, particularly in Florida and California, where natural disasters have intensified. Over 70% of Florida homeowners and more than half of California homeowners report being affected by these issues, compared to about 45% nationwide. These changes are attributed to insurers scaling back coverage due to heightened risks, such as wildfires in California and floods and storms in Florida.
Mounting insurance costs and the threat of natural disasters are prompting some residents to consider relocating. In Florida, 11.9% of respondents planning to move cited rising insurance costs, while in California, 13.1% expressed concern about natural disasters. However, despite these concerns, there’s still a net influx of people moving into these areas, according to Redfin’s analysis.
The impact on property values is a significant concern, with homes in areas with stable insurance premiums expected to gain more value compared to those facing escalating costs and coverage uncertainties. Already, some parts of Florida are witnessing falling condo prices due to increased insurance costs and HOA fees.
Most Florida Homeowners Facing Higher Insurance Costs or Coverage Changes (Credits: Redfin Investor Relations)
A notable portion of homeowners in Florida and California have experienced insurance-related changes firsthand, with approximately one in eight Florida respondents and one in nine California respondents reporting their insurer stopped offering coverage for their homes. Concerns about future coverage also weigh heavily on homeowners, particularly in Florida, where over a quarter fear their insurer might cease coverage.
The situation is exacerbated by the financial burden on homeowners who have lost coverage, with a third of those affected indicating they’ve moved or plan to move to areas with available coverage. However, almost equal numbers of people stay in their homes with little or no coverage, while others face significantly higher premiums or resort to state-created plans that may not fully cover losses.
The report also highlights a concerning lack of awareness among homeowners about their insurance coverage, with only about a third knowing which natural disasters their policy covers. This underscores the importance of homeowners reviewing their policies, considering additional coverage for specific risks, and staying informed about their insurance options in the face of increasing climate-related disasters.
Real estate agents are seeing a surge in insurance-related issues during transactions, particularly in Florida and California, further indicating the widespread impact of these challenges on the housing market.
