Many scientists are convinced that global warming is for real and we should take immediate action to deal with it, or it's just going to get progressively worse. It appears that they have a good point. Natural disasters across the world are getting more frequent and powerful. Southern Nevada is very familiar with a prolonged drought currently affecting our water supply. How about Katrina's recent assault on New Orleans? And the list goes on. More wildfires out West, strong blizzards in the Midwest. Besides the science community, the insurance industry has also taken notice of the looming threat.
As these devastating natural events have been damaging and outright destroying residential real estate, in their wake insurance claims filed by affected homeowners have been hitting new highs. The first reaction from the insurance side to that has been to hike the premiums they charge customers, an entirely anticipated move. Especially Florida and the Gulf states, the more vulnerable regions, have seen steep rate increases, but they are also going up all along the eastern seaboard, and elsewhere.
As things seem to be getting worse, some insurance firms have stopped writing policies altogether and pulled out, claiming that natural disasters have about doubled over the last five years and the culprit is clearly global warming. The level of risk has reached a point where they can't operate any more.
So, to fill the void, states are forced to step in and provide insurance coverage. It's debatable if you want to go that route. What it means is that the homeowner is paying out taxes with one hand and receiving insurance claim payments from the state with the other. At least Florida, Texas, Louisiana and Massachusetts are doing that now.
What can all this lead to? Living in certain high-risk regions becomes too expensive because the hazard insurance is too high? The coverage will always be available by some entity, but at what cost does it go beyond what people are willing to pay. That'll make you think. Banks won't lend mortgage money unless the property is covered by an insurance, so that'll complicate the issue. If homeowners aren't able to sell and buyers aren't able to insure and buy, how is that going to shape a particular real estate market vulnerable to natural upheavals?
Photo by greenmannowar.
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