How Global Climate Change Affects Homeowners Insurance Rates in the Southeastern United States

Since the damage from hurricanes and rising sea levels has hurt the Coastal Southeast, Atlanta insurance companies are looking for other symptoms of global climate change that have been affecting the region (and homeowners insurance rates) in somewhat more subtle ways.  Even in landlocked areas such as Atlanta are not immune from these effects that translate into hikes in homeowners insurance rates.

Of course, hurricanes dominate the huge increase in homeowners insurance rates that have occurred in Florida and other coastal regions, though it is also important to note that these hurricane-related increases have been spread throughout the home insurance nationwide, especially since many small and local insurers have gone out of business altogether in the region.  As homeowners insurance rates have climbed, many have even been dropped from their chosen insurers and forced to rely upon insurers of last resort, sometimes offered through the state.  

As rates have climbed in coastal Southeastern states such as Florida and Georgia, landlocked states in the region have felt a crush for housing, driving up rents and property values, as well as the local taxes to cover the influx of resource-requiring residents.  The higher population density also drives up the perceived risk for those carrying comprehensive policies. These higher property values and risks translate to higher homeowners insurance premiums.  

Even as these large storms increase in frequency, droughts and heatwaves have also become commonplace, driving up the cost of other types of insurance and taxing the water supplies.  In some Southeastern areas, the water table has sunk fast due to demand and lack of replenishment, causing sinkholes to open up.  The presence of even a single sinkhole in many Southeastern counties can cause a whole neighborhood to be dropped from their insurers despite the massive and expensive damage even a small sinkhole can cause to foundations.

The impact of related types of insurance can tax your insurance company's coffers.  For instance, a massive drought-related crop failure could influence the overall assets of an insurer that also offers homeowners insurance.

Indeed, even climate change events that occur on the other side of the world are cause for a global insurer and the insurance markets as a whole to try to recoup their losses.  Ultimately, the vast swath of the consumer homeowners insurance covers all insurer losses, since they either make money or close up shop.

Find more articles tagged with: