Homeowners across the United States are facing a tough decision when it comes to their insurance coverage. Inflation and the effects of climate change have caused a significant increase in insurance premiums, leaving many struggling to afford their policies. Robert Shiver, a homeowner in Florida, saw his insurance bill more than double from $3,800 to $8,000, prompting him to work with his insurance agent to lower his coverage and bring his bill down to just under $5,000. However, this decision has left him underinsured, meaning his policy may not be sufficient to cover a rebuild after catastrophic losses.
According to insurers, losses from natural disasters have exceeded $100 billion for four consecutive years, and they are passing those costs on to property owners. In response, some homeowners are opting to forgo protection against hurricanes or windstorms, lowering the replacement values of their properties, or raising their deductibles. Others are finding their policies won’t fully cover the cost of rebuilding due to steep increases in the cost of materials after a disaster has struck.
In response to the widespread underinsurance problem, Colorado’s insurance commissioner, Michael Conway, has been working with insurance companies, builders, and other groups to brainstorm ideas for making things easier for homeowners. However, no plans have emerged so far.
Opinions on this matter are divided, with some, like insurance agent Brian Marino, expressing concern that homeowners may end up unable to afford a complete rebuild if they only carry enough coverage to satisfy their lenders. On the other hand, some wealthier homeowners are willing to take the risk of being underinsured because they can afford to repair their properties themselves.
As the insurance market continues to be volatile and unpredictable, homeowners are left facing tough decisions about their coverage and financial stability in the event of a disaster. The increasing costs of insurance premiums and the challenges of finding affordable coverage have left many grappling with the least worst option. There is a need for solutions to address the underinsurance problem and alleviate the pressure on homeowners to find affordable coverage.