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How Climate Change Impacts Home Insurance

The vast majority of the world accepts that climate change is happening, though some conservatives in America doubt whether it is man-made or not. Here's another question: what does global warming mean for your homeowners insurance?

The natural forces tied to climate are significant risks to homes and big factors in determining insurance premiums. Changes in those risks mean changes to premiums and policies.

How Climate Is Changing

Scientists at American universities, in the UK, in South America, and even the United Nations agree that climate change is already happening. Glaciers are melting and this is evidence, but there's more. Record floods and droughts in Sri Lanka, Brazil, and China, as well as deadly heat waves in the United States and across Europe, are all consistent with the projections from climatologists.

It's not just that the planet is getting hotter – it's that it is getting hotter in some places, cooler in others, and currents and weather patterns are changing. Desert could become rainforest, prairies swamps, and tundra could be eradicated altogether.

What Insurers See

Insurance companies look at climate change and they see chaos. The statistics they have used for a long long time are quickly becoming irrelevant. They won't be quite certain how to determine how at risk a given home is to disaster.


As flooding has gotten worse already, many home insurance companies have responded by making flood insurance non-standard for insurance policies. It has been largely separated from water damage coverage.

Many people who need flood coverage do not have it because they do not live in an area traditionally susceptible to floods. With climate change, however, tradition is out the window. We are seeing higher levels of precipitation in many areas of the United States. There has already been record flooding in Pennsylvania and in Texas.

Check with a climate authority to be sure you are safe. If you aren't, get flood coverage on your home insurance.


Some places have seen record lows in precipitation, which has caused drought. While drought is a threat to all animal life, it gets worse when it leads to wildfires, as we have seen in Texas and California recently. If your climate becomes more arid, it could easily mean an increase in premiums.


Climate scientists have predicted that hurricanes will become more common and worse. It is as yet unproven that the recent hurricanes are caused by climate change, but it is definitely true that they were made worse by some of the effects of climate change.

Tropical storms do not normally go so far inland as Irene did. The reason Irene made it so far and did so much damage was her ability to pick up so much moisture along the way. A hurricane or tropical storm gets moisture from the surface water of the oceans and gulf. In this case, surface temperatures were abnormally high due to global warming, which meant that a larger amount of moisture could be taken in, fueling Irene on her path of destruction.

People in the inland United States may have to get hurricane coverage on home insurance soon. People in coastal states susceptible to hurricanes may also see higher hurricane deductibles and hurricane coverage premiums.

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