Insurance isn’t the sexiest topic to either write or read about, but an extreme weather-driven downtrend of insurance agency availability is tightening the noose on an already suffocating national housing market.
The U.S. had its highest number — 28 — of annual billion-dollar weather disasters in 2023, including the Lahaina wildfire, California flooding, and Tropical Cyclone Idalia in Florida, according to a NOAA report. Homeowner insurance agencies’ response to the continually rising costs has either been to drastically increase their insurance rates or to back out from certain areas entirely.
The dire situation first made national headlines last year when numerous agencies, including State Farm, Allstate and Farmers, either paused or placed heavy restrictions on policyholders in wildfire-prone areas in California. Seven of the state’s top 12 insurance agencies have put the restrictions into effect as of November, ABC News reported.
Colorado appears to be the next state to face extremely tight, or nonexistent, homeowner insurance policies caused by increasing wildfire threats. The Durango Herald recently reported the average homeowner insurance premium in the state increased 51.7 percent between January 2019 and October 2022. Meanwhile, some new homeowners in the state are having trouble getting policies at all.
“A State Farm insurance agent in Durango wrote a couple a quote for homeowners insurance. But six days before closing, the State Farm office called to inform the Bowmans that it could not write them a policy,” said the Herald’s story on a couple who recently moved to Durango. “Geico, Travelers, other State Farm agents – all of them turned him down.”
Local insurance businesses in Durango reportedly have “plummeted” by 20 to 30 percent since insurers changed their policies sometime last September. Agents in Colorado expect the insurance issues to keep piling up in the years to come. A Climate Change in Colorado Assessment report for 2024 found climate change and increased atmospheric warming will lessen streamflows and make the state drier, leading to more and worse wildfires.
“Studies have uniformly indicated substantially worsened wildfire risk for Colorado by the mid-21st century compared with the late 20th-century, as additional warming further increases fuel dryness and enhances fire ignition and spread,” the report from the Colorado Climate Center said.