Homeowners’ insurance in high-risk states is becoming prohibitively expensive for older Americans who want to keep their homes.
By Martha C. White
As a money management professional, Eric Diton helps his clients manage complex personal finance issues. But he’s finding that more of them are frustrated by a surprisingly mundane budget item: homeowners’ insurance.
“I can definitely say that for my Florida clients, it’s a topic of conversation and it’s on their radar,” said Mr. Diton, president of the Wealth Alliance, an investment advisory firm. “They’re seeing that their cost of insurance is rising.”
Mr. Diton, who splits his time between Boca Raton, Fla., and Long Island, said he found himself in the same boat. “Personally, my insurance company increased my premiums quite a bit,” he said of his home in Florida. “It was pretty challenging to find a lot of choice, and that has resonated with a lot of people in this state.”
While Florida residents are not the only ones wrestling with this issue, the state’s popularity with retirees means that it is a problem a growing number will confront, experts say. When drawing up a budget for living on a fixed income, most would-be retirees think about services and goods, such as doctor visits or prescription drugs, that are likely to cost more in the future. Almost no one thinks of home insurance — an omission insurance professionals warn will be an increasingly costly mistake.
Many Americans’ plans to retire in a coastal Sunbelt state or a scenic mountain hamlet are on a collision course with extreme weather — and the property damage that follows.
“In some regions, we already see changing weather patterns, most likely driven by climate change, already having an impact,” said Ernst Rauch, chief climate and geoscientist at the reinsurance company Munich Re.
After absorbing punishing losses from floods, hurricanes and wildfires in recent years, many insurers are re-evaluating their risk modeling practices. The upshot for many homeowners is higher property insurance bills. Others can find themselves struggling to get a policy at any price.
“In certain parts of the country, the insurance situation has really been difficult — in particular, Florida and that area, including Louisiana and the Gulf states,” said Nancy Albanese, vice president of personal insurance at BMT Insurance Advisors. “The other market which is very difficult is California, and some of the Western states that are exposed to wildfire.”
She added: “When we encounter a client who needs coverage in Florida, we know that’s going to be a huge challenge.”
Karen Collins, assistant vice president of personal lines for the trade group American Property Casualty Insurance Association, said she and her colleagues were seeing “a very significant increase in losses recently.”
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