Financial expert Suze Orman has expressed concerns about the impact of climate change on property insurance costs, saying it could threaten the American dream of homeownership. Orman, 72, faced a $28,000 annual insurance quote for her oceanfront condo in Florida, leading her to forgo coverage altogether.
It highlights a worrying trend that soaring insurance costs caused by frequent and severe weather events could deter Americans from buying a home.
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“Climate change is going to make a big difference in people’s desire to own their own home,” Orman told DailyMail.com.
She pointed out that increasing unpredictability in places like Southern California and areas newly prone to severe hurricanes amplifies homeowners’ anxiety, especially in combination with high mortgage interest rates.
This sentiment is supported by data showing a 23% increase in the national average cost of homeowners insurance in one year, which now averages $1,759. The rise in premiums follows a record year in which the United States experienced 28 natural disasters each causing more than $1 billion in damage.
According to the News-Press, Florida has the highest home insurance rates in the United States, and they’re expected to rise further. In 2023, the average annual premium for Florida homeowners was $10,996. In April, Insurify predicted a 7% increase this year, which would bring the average cost to $11,759.
Orman’s frustration with insurance rates is palpable. Referring to her situation, she said: “$28,000 for a 2,100 square foot condo. You are laughing at me ?
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Its decision to “self-insure” reflects a growing trend among homeowners who own their property and choose to risk not having coverage.
Although self-insurance is increasingly popular, it carries considerable risks. In the event of a disaster, such as a fire or tornado, a homeowner without insurance would be responsible for all repair or rebuilding costs, which could be devastating. Anyone considering this path should have a strong financial safety net.
The insurance market as a whole has responded to increased risks by increasing premiums and withdrawing from high-risk areas. For example, State Farm Insurance stopped insuring homes in California due to wildfire risks, reflecting a trend among insurers to recalibrate their risk exposure due to climate change.
Insurance issues are further complicated by practices such as “takeaway” in Florida, where new businesses select lucrative policies, leaving less desirable policies behind. This system, described by Insurance Executive Bruce Lucas on “The Insurance Guys” podcast, showcases evolving strategies to manage growing risks and opportunities in states like Florida.
As homeowners face increasing costs and insurers adjust their strategies, the future…
