This year’s hurricane season is shaping up to be a financial storm for homeowners in several states. According to a new report by Insurify, the cost of home insurance is set to rise significantly in states likely to be impacted by hurricanes, including Florida, Louisiana, Mississippi, Alabama, Georgia, South Carolina, North Carolina, Virginia, and New York.
Florida and Louisiana Hit Hard
Already leading the nation in high home insurance costs, Florida and Louisiana are bracing for even steeper hikes. Florida’s average annual home insurance cost, which currently stands at $11,000, is expected to increase by 7%, reaching $11,759 by the end of 2024. In Louisiana, the average cost is projected to rise from $6,354 to $7,809.
The Impact of Climate Patterns
The predicted surge in insurance rates is tied to changing climate patterns in the Atlantic basin. As El Niño transitions to La Niña, creating an ideal environment for hurricanes, the likelihood of increased hurricane activity is high. The National Oceanic and Atmospheric Administration (NOAA) forecasts a 60% chance of La Niña developing between June and August.
Jacob Gee, an insurance agent with Insurify, explains, “If there’s a surge in the number and intensity of hurricanes, insurance companies would face higher payouts for property damage, business interruption, and other related claims. This would likely lead insurers to reassess their risk models and adjust insurance rates accordingly.”
A Burden for Homeowners
For many homeowners, the rising insurance costs are just another burden. A separate Insurify survey revealed that 30% of homeowners are already struggling to afford their current mortgage interest rates. Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, noted that the pandemic prompted a population surge in Southeastern states due to looser coronavirus guidelines, further driving up insurance costs.
“That movement has triggered a series of events that are now hurting homeowners more than helping them,” Beene told Newsweek. “Higher home values have increased all other expenses pertaining to them, with perhaps the most stunning being a dramatic rise in insurance prices that have even caused some homeowners to drop coverage completely.”
A Growing Financial Strain
As homeowners in hurricane-prone states brace for rising costs, the financial strain is becoming increasingly difficult to manage. Rising insurance rates are just one of many escalating expenses, making it harder for homeowners to maintain their properties or consider relocating within the affected states.
“It’s yet another increase which is going to make insurance more difficult to afford and make homeowners think twice before relocating to another house in the states affected,” Beene added. “Ultimately, I think these rising rates will have a negative effect on home ownership in this area of the country long term. Paying fewer taxes and attaining a lower overall cost of living are factors that can be if it feels financially impossible to afford and insure a house in many areas.”
Hurricane Season: Rising Insurance Rates Ahead
As the hurricane season approaches, homeowners and potential buyers in the affected states are left to weigh their options carefully. The anticipated insurance rate hikes serve as a stark reminder of the financial challenges posed by living in hurricane-prone areas. With costs expected to rise further, the landscape of home ownership in these states could undergo significant changes in the coming years.
The Insurify report serves as a critical warning for residents and policymakers alike, emphasizing the need for comprehensive strategies to address the financial impact of increasingly severe weather patterns.
