Florida Is Having an Insurance Crisis — Could It Happen Elsewhere?

Homeownership can already be expensive enough, but one cost is rising — and may get even worse.

Driven by recent climate disasters, insurance premiums are rising astronomically across many states, significantly impacting residential and commercial real estate markets and, in some cases, even causing deals to fall apart due to high costs and limited insurance availability.

Some coastal states, like Florida, have been affected the most, but the varying impacts across the country are shifting the competitiveness of the real estate market and leaving many property owners at risk of losing their insurance coverage.

Read on for more about the challenges — and to learn if you’re at risk. Plus, find out more smart money moves you can make as a homeowner. 

The insurance crisis has led to skyrocketing premiums and carriers leaving coastal states like Florida and California. This situation is spreading, fundamentally altering real estate markets nationwide.

The inability to secure affordable insurance is causing real estate deals to collapse. Bill Baldwin, a Houston realty owner, notes that insurance companies are imposing nearly impossible demands, leading to failed transactions.

Insurance companies themselves are grappling with substantial losses from natural disasters, with nearly $80 billion in insured losses last year. Climate risk is key, driving insurers to hike rates, shed risks, or limit new business.

Due to recent hurricanes, Florida policyholders face premiums nearly five times the national average. California's insurance market is shrinking, and Louisiana homeowners are paying triple the national average, highlighting regional disparities.

High insurance rates are even affecting the labor market, as they complicate site selection and affect recruiting and hiring processes for big companies. This factor is even now part of CNBC’s 2024 America's Top States for Business study, considering regional premium increases and living costs.

The impending insurance crisis, driven by climate disasters, is reshaping the real estate landscape and increasing homeowners' costs. While some experts hope for stabilization by 2025, states are taking various measures to address the issue. 

Meanwhile, if you’re buying a home, real estate pros advise clients to secure insurance early in navigating this challenging environment.