Source: Semafor
by Tim McDonnell
“Climate change is already driving up the price of home insurance in the US: A National Bureau of Economic Research paper last year found that households in vulnerable places are on track to pay an average of $700 per year more on insurance than those in less exposed areas. But climate risks are also rising rapidly — 2024 broke yet another global temperature record, which almost certainly contributed to worsening the current fires. For now, home insurance in most vulnerable places in the US remains much too cheap relative to risk. Economists know this, but raising insurance rates is unpopular. And while politicians and insurance companies wrangle over reforms, the value of the US housing market is rising, meaning bigger losses in value for homeowners of all income levels when a big insurance adjustment eventually arrives. California’s wildfires illustrate the risks of too-cheap insurance.” (01/14/25)