Millions Could Lose Insurance in Flood, Fire Areas | Climate Denial Crock of the Week
Other natural disasters such as wildfires, flash floods and hail have become increasingly costly for the industry, even though they were traditionally seen as lesser risks and classed by some insurers as “secondary perils.”
From 2010 to 2018, average insured losses from secondary perils were almost double those from primary perils such as earthquakes and hurricanes, a Reuters analysis of Swiss Re data showed.
Fires on the West Coast, record flooding in the Midwest and the ferocious hurricanes battering the Southeast will all contribute to a significant decrease in home insurance availability. Not only is that bad news for people who are worried about being able to rebuild after a disaster—for many, it’s a threat to their ability to remain homeowners at all.
“If you’re super wealthy, you can self-insure,” Keenan said. “For others, they will no doubt be forced into an eventual foreclosure because they’re defaulting on their mortgages.”
Most lenders require a mortgage holder to insure their home in order to maintain the mortgage. If the insurance company in their area decides their neighborhood is too risky to insure, then they will lose coverage and likely default on their mortgage. If the mortgage is already paid, it may be extremely difficult to sell a house that can’t be insured.