Credit: Leonard Zhukovsky/Big Stock Photo
21 November
Rising insurance costs linked to climate change spark mortgage troubles
Homeowners facing surging insurance premiums due to worsening natural disasters are increasingly at risk of mortgage delinquency, according to new research.
Mario Alejandro Ariza reports for Floodlight.
In short:
- A $500 annual increase in home insurance premiums correlates with a 20% rise in mortgage delinquencies, based on a study not yet peer-reviewed by New York University researchers.
- In some counties in Florida, some homeowners report spending over 5% of their income on insurance, said a researcher.
- Higher reinsurance costs, severe weather and climate-driven disasters have caused insurance companies to raise premiums, with some homeowners opting to pay off mortgages early or forego insurance entirely.
- In fact, a report published last August noted that last year, 30% of losses from natural disasters went uninsured.
Key quote:
“This is how many people across the country are beginning to directly experience how climate change is changing our world and the cost it’s going to have.”
— Moira Birss, research fellow at the Climate and Community Institute.
Why this matters:
As climate change intensifies storms, floods and fires, skyrocketing insurance costs are pushing vulnerable homeowners into financial distress. The housing market and public funds may face growing risks as insurance affordability declines in high-risk areas.
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