The U.S. home insurance market is careening toward disaster as policy premiums soar and private insurers exit high-risk states, threatening to affect millions of homeowners nationwide.
In California, nonrenewal of home insurance policies spiked by a whopping 30% in 2021 compared to the previous year, according to the most recent data from the California Department of Insurance. In Florida, meanwhile, homeowners are shelling out insurance premiums four times as high as other states amid a mass exodus of at least six major property insurers in the last two years.
These programs are limited, high risk, and typically only cover those who can prove they've been denied coverage or faced a rate increase of more than 20% by their current provider. But they are also increasingly serving as a “relief valve” for states that have seen an uptick in natural disasters, including California, Louisiana, and Texas, according to the American Property Casualty Insurance Association.
"Most major companies, the ones with substantial revenue and the capital to weather tough situations, have stopped writing coverage in Florida and Louisiana and California,” he said. This year, private insurers such as USAA and Farmers increased homeowner insurance premiums by double digits, raising costs for policyholders in more than 40 U.S. states by 14.7% and 14.8%, respectively.