The Impact of Climate Change on Home Insurance in California and Florida

Insurance companies are pulling out of high-risk areas due to rising reinsurance costs and increasing losses from natural disasters. State insurance regulations, such as limiting premium increases and requiring certain levels of coverage, can also contribute to insurers leaving. When insurers pull out, residents and businesses without insurance are left holding their own risk, which can lead to slower recovery. States can create private or public insurance options of last resort, but these generally have very pricey premiums. To fix insurance, communities can make smarter land use choices, adopt more stringent building codes, price risk into home sales, require comprehensive disclosures of all present and future risks, make risk information accessible and understandable, and help residents in high-risk areas relocate through buyouts and managed retreat.