A neighbor of mine just had a buyer drop the contract to purchase his house when the buyer couldn’t find an insurer to provide a policy on the house. The house (and entire neighborhood) is in a densely treed area, surrounded by National Forest, as are most of the neighborhoods in the Jackson Hole area. I had planned on living in our house, which we bought in 2004, another 5 years, until the kids are all out of the house, then moving somewhere warmer. Interesting times, to be sure.
Insurers have quit writing policies in Texas, Louisiana, Florida and California due to hazards (flood and wildfire) exacerbated by climate change. How many billions of dollars in value will be destroyed as these houses can’t be financed or insured?
Well, they’ve stopped writing some policies, and that’s a good thing. Homes shouldn’t be built in flood zones in the first place, and about a third of homes are built in areas known as the wildland-urban interface (WUI).
Rapid growth of the US wildland-urban interface raises wildfire risk
Radeloff et al. https://www.pnas.org/doi/10.1073/pnas.1718850115
Abstract:
When houses are built close to forests or other types of natural vegetation, they pose two problems related to wildfires. First, there will be more wildfires due to human ignitions. Second, wildfires that occur will pose a greater risk to lives and homes, they will be hard to fight, and letting natural fires burn becomes impossible. We examined the number of houses that have been built since 1990 in the United States in or near natural vegetation, in an area known as the wildland-urban interface (WUI), and found that a large number of houses have been built there. Approximately one in three houses and one in ten hectares are now in the WUI. These WUI growth trends will exacerbate wildfire problems in the future.
There is one house in our subdivision that was completed just in the past few months. And yes, he did get it insured, and it is a fire-resistant design.
The vast majority of houses in the WUI will not have those design features. It seems that some insurance companies are exiting entire markets rather than drilling down on underwriting specific properties within a larger hazardous zone, or state.
Can’t fault the insurance companies on this. Why would they want to continue to write policies that will turn into massive losses for them?
I agree. Though, insurance companies don’t really bear that burden. Flood insurance is through the Feds. Insurance companies won’t touch it otherwise.
They shouldn’t be built on beaches, either. If you do, and a hurricane washes away your house, that should be on you.
As for Tim wanting to move somewhere warmer, just wait. Temps are going up all over the west (among other places). The warmer weather will come to you.
Sometimes the state will require them to if the company wants to do any business in the state.
FWIW, a number of property insurance companies have exited California. Also, several automobile insurance companies have exited, including Allstate, American National, and State Farm.
They return when the State Insurance commissioner approves the big rate increases.
Of course, many homeowners who don’t have a mortgage will decide to go bare and drop the coverage (as my Insurance Actuary brother did a few years ago on his ocean front home.)
So they have a loss and lose their equity. Then what? Do they have resources for another home? Or do they become a welfare family? Homeless? Dependent on FEMA?
We are going through this in St Louis where last years tornado tore through a poorer neighborhood. Many families had owned the home for generations but had no insurance.
Authorities are trying to deal with this situation. Population is in decline in the area. They do not want them to move. But govt assistance has been slow. People are living under tarps.
Should govt repair their property? Money is available. How do you do it fairly?
Thought this article is applicable to the subject.
Ponder a $44,000 insurance bill.
More than a year after infernos tore through Los Angeles County, millions of Californians like the Crawfords are suffering through a home-insurance crisis that has rolled on for years with eye-watering rate increases, canceled policies and rejected claims.
Two of the biggest insurers, State Farm and Allstate, aren’t selling to new customers in the state, despite getting double-digit rate increases approved for their existing policyholders. A third, Farmers Insurance, has committed to cover more homes in fire-prone areas, but only a fraction compared with the drop in its overall number of policies since the crisis began.
The insurance dysfunction has spread to California’s housing market, the country’s biggest and most expensive, with nearly one-in-five real-estate agents reporting a canceled sale last year because of clients unable to find affordable insurance, according to a survey by the trade body California Association of Realtors.
Others continue to shun the state despite winning big concessions. California regulators approved a 34% rate increase for Allstate in 2024. Yet it has no “growth aspirations” in California home insurance,
I mean, they have a seven thousand square foot house that’s worth $3.3 million. Doubled in value from when they bought it 14 years ago. If you have a really expensive house in an area that’s got a material risk of property destruction, you’re going to have to pay a lot in homeowner’s insurance - because you have a very high actuarial cost of your risk. And probably not much of an argument that the government should intervene to shift that risk to other market participants (ie. taxpayers or other much lower income rate payers) - again, because you have a seven thousand square foot house.
Makes sense. People seem to think they should be able to build wherever they feel like it without any consequences. Like the flood plain around Houston (which flooded not that long ago). My favorite are the people in FL building beachfront property only to have it washed away by the next CAT4 hurricane, as if they couldn’t have predicted that. CA is less stormy, but I remember when Malibu beach homes were destroyed several years ago.
People need to read the disclosures. Your house is on a fault line. Your house is in a floodplain. Your house is near a semiconductor manufacturer that handles seriously nasty chemicals. Etc.
I mention the manufacturing because when I started with my company 30 years ago, there weren’t any houses nearby. Several of us watched as housing developments sprang up, and we wondered if people knew what went on in the plant. If there is an incident in the fab, it’s designed to vent everything for the safety of the workers. “Everything” contains some really nasty stuff.
What 1pg said, and also, the trend for humungous showboating houses in “scenic” locales is an obscene affliction, and I have no sympathy. The flood plain houses are simply insane, and for a hundred years the building industries and go-go local governments have gotten away with large scale fraud.
One in Five California Home Sales Canceled Due to Unaffordable Insurance
Very deceptive headline, especially in light of the articles’ basis for the claim. I’m not sure why the journalist is gaslighting the California homeowners’ insurance market. What the survey by the trade body California Association of Realtors actually said was, “nearly one-in-five real-estate agents reporting a canceled sale last year because of clients unable to find affordable insurance” If you want to gaslight insurance premiums, then just look to Florida. According to Bankrate, the average homeowners insurance in Florida is $5,828 per year for a $300,000 home. According to Bankrate’s 2026 data, the average cost of homeowners insurance in California for a policy with $300,000 in dwelling coverage is approximately $1,641 per year.
The reason California RealEstate Market has been flat for the last few years is mostly due to the unavailability of inventory on the market, and has little to do with high insurance premiums. Actually, the high-end real estate market in California in 2025 has seen intense bidding wars in markets like the Bay Area and Los Angeles due to low inventory on the market.
You’re saying that One in Five California Home Sales Canceled Due to Unaffordable Insurance is the same as one Real-estate agent out of five reported a lost sale due to the client unable to find affordable insurance?