Florida real estate agent Eloy Carmenate remembers the time that he acquired a household insurance policy before purchasing the property, more than the challenge he has now.
“If you’re on a mortgage, it’s always necessary to get insurance, but it’s not a big deal over the past few years,” says Carmenate, an agent with the Corcoran Group in Miami Beach. “We’ve seen an increase in natural disasters that make insurance more expensive and more difficult.”
A combination of higher premiums and, in some cases, Find coverage Some home buyers are often thinking about purchasing real estate due to the high risk of flooding and other natural disasters.
A report by Zillow shows that an analysis of homes for sale nationwide in June 2024 took another 12 days to facilities with higher risk of flooding and fire compared to low-risk homes. Homes with high flood risk usually sell price less than 6%, while homes in high areas are Risk of wildfires We saw a 1.4% discount.
Climate concerns concern the “reshaping” housing market
A decade-long weather disaster has caused roughly $1.4 trillion in damage in the US over the past decade, with most of the decade on record breaking new records in 2024 and new records in 2023, according to the National Maritime and Atmospheric Administration. Warming oceans strengthen weather phenomena by providing more energy and moisture to storms, with strong winds, rainy and Increase in floods.
“The risks of natural disasters and rising insurance costs are deeply restructuring the housing market,” said Kara Ng, senior economist at Zillow. “Home buyers are paying attention.”
Over 80% of home shoppers Consider climate risks Zillow data shows when you’re looking for a new home. Additionally, more than half of new listings take on major climate risks.
Most future buyers say their main concern is flood risk, with wildfires, extreme temperatures, hurricanes and droughts continuing. According to the Department of Homeland Security, approximately 90% of the damage caused by natural disasters in the United States are accompanied by flooding.
Insurance costs can make your home affordable
The insurance industry is working to increase Extreme weather By hiking rate to cover losses. The rise in extreme weather-related premiums is in addition to post-pandemic inflation-related increases. The premium began to rise about a year after inflation peaked in 2022, making wood, drywall and other construction materials more expensive and increasing the cost of replacing the home.
According to data from Quadrant Information Services, the average home insurance cost for a $300,000 residential coverage policy increased 7% from June 2022 to April 2025.
These numbers are not included Flood insuranceyou will usually need to purchase a separate policy. According to data from the Federal Emergency Management Agency, the average annual cost of flood insurance premiums for the National Flood Insurance Program is $870, up 8.8% from 2023 to $870.
Home buyers are already narrowed down by high home prices and mortgage fees above 6%, so home buyers are shocked when they look at their volumes Home insurance costs moneysays Daryl Fairweather, chief economist at Redfin.
Expensive insurance adds to your Piti payments
For some potential buyers, a large premium can lead to mortgage denial. That’s because it increases monthly housing-related costs that exceed levels approved by mortgage lenders.
Lenders use combined formulas Monthly payment Known as Piti: a combination of principal and interest on a mortgage, plus taxes and household insurance. Typically, lenders want to ensure that PITI payments do not exceed 28% of the borrower’s monthly income.
“A big premium could knock someone out of the market,” says Calmenate, a real estate agent in Miami Beach.
Last resort insurance companies are available – Cost
To limit exposure, some of the nation’s largest insurers have left high-risk markets in states such as California, Florida and Louisiana. Others are limiting their exposure Non-update publishing For high-risk properties – that is, they refuse to update their annual policy despite the homeowner paying on time.
“There is a clear correlation between non-renewable rates and climate risk,” A said. Report from the US Senate Budget Committee It was published earlier this year.
That’s the top of the non-update Florida is prone to hurricanesaccording to a Senate report. Also in the top five is California, with seven major home insurance companies being suspended or restricted in the state due to wildfire losses, or Louisiana, where more than a dozen companies have left the state in the past two years.
Homeowners are tied up due to lack of insurance options. If they have a mortgage and lose coverage, their mortgage servicers will issue a “forced location” policy that is paid at a high price by the homeowner, despite primarily protecting the mortgage company.
Most states have a stop gap option known as “last resort insurance companies.” Usually it is a nationally mandated consortium of private insurance companies that issues policies that only cover catastrophic losses. It usually has less coverage and is more expensive than standard home insurance. In California, it could cost more than twice as much, but it’s sufficient to meet your mortgage requirements.
Citizens Property Insurance Corporation, a Florida last resort insurance company, accounts for 17% of the market share of the residential multi-peril homeowner policy in Sunshine. Civil airlines willing to write policies often exclude important hazards such as wildfires and wind from their policies. Florida homeowners generally need to purchase individual storm insurance policies, and when it comes to wind-only home insurance, citizens are covering up 78% of their market share.
Private insurers will need to kick more money if a widespread loss event causes claims beyond the funds of the state available. Higher Premium.
“There are many concerns about the rise in housing insurance costs as well as the availability in certain parts of the country,” says Lawrence Yun, chief economist at the National Association of Realtors. “In some cases, it’s part of a home buying decision.”
