Extreme weather events due to climate change are leaving many homeowners across the country uncertain about home insurance coverage. While states like California and Florida are predominately hit with severe weather, such as wildfires and hurricanes, recent reports suggest insurance rates could increase by nearly 25% to 35% across the country next year due to a spike in natural disasters. Reports also show that the number of billion-dollar disasters in the United States has increased from 6.7 per year (2000-2009) to an average of 20 per year so far this decade, with the wildfires in Maui being the most recent disaster.
As extreme weather hits homes nationwide, how do Americans feel about their current insurance coverage, and how confident are future homeowners in obtaining it? CivicScience took a pulse on consumer sentiment regarding extreme weather and home insurance coverage – here are three key insights generated from the InsightStore.
1. Nearly 9-in-10 Americans have experienced a natural disaster, but extent varies by region.
CivicScience polling from earlier this week shows that 86% of Americans say they have personally experienced or been affected by some natural disaster. However, the extent of the disaster depends on the U.S. region. For instance, Americans residing in western states are much less likely to have experienced severe storms or tornadoes – which are most likely to be reported by Southerners. However, people living in the West are about three times as likely as other regions to have experienced earthquakes or wildfires.
Conversely, Americans living in the Midwest and Northeast are the least likely to report natural disasters compared to other regions, but a large percentage still experience them.
2. Consumers are not optimistic about obtaining home insurance, especially new homeowners in the South.
Given extreme weather across the country (and not to mention inflationary prices), some insurance companies, such as State Farm, stopped taking home insurance applications in California due to the growing risk of wildfires. Other insurance companies have added policy exclusions and/or increased rates. This could ultimately lead to homeowners scrambling to find home insurance and/or to be priced out.
CivicScience data show there’s a significant concern when it comes to obtaining new home insurance. Among those planning to buy a home in the next 12 months, 43% are somewhat or very concerned about obtaining home insurance to protect their home from extreme weather events (25% are very concerned).
As expected, the level of concern varies by region. Americans living in the southern U.S. states (who reported experiencing natural disasters the most) are the most likely to express extreme concerns about insuring their home against natural disasters (28%). This figure stands nine percentage points higher than those with strong concerns living in the Northeast (19%).
When it comes to overall concerns, Southerners and Westerners report the highest worries. Conversely, individuals in the Northeast are the most likely to express no concerns at all.
3. Nearly 3-in-10 current homeowners don’t feel confident in their home insurance coverage, and 4-in-10 say their rates increased over the last year.
How do current homeowners feel about their insurance coverage? Among U.S. adults who currently own a home, 28% say they’re not confident in their insurance policy covering expenses in the event of extreme weather. However, the majority (62%) are confident in their policy’s coverage.
Conversely to those planning to buy a home in 12 months, current homeowners in western states – the U.S. region with the most policyholders in general – are the least confident in their policy coverage. In contrast, Midwesterners are the most optimistic about their insurance policy covering home expenses in the event of extreme weather – perhaps because they report fewer natural disasters than other regions.
Despite wavering confidence levels, most home insurance holders have reported policy changes in the last year. Data show that nearly 60% of U.S. adults say their policy changed in the past 12 months, compared to about 40% who said it did not. In particular, policyholders are most likely to say their home insurance rates increased (42%) in the last 12 months – far outpacing other policy changes. Ten percent report they’ve switched insurance companies, 7% are receiving less coverage now, 6% lost coverage completely, and 9% report their policy changed in some other way.
Amid severe weather spikes and recent natural disasters, it’s clear that consumers are increasingly concerned about home insurance coverage. CivicScience will continue to track consumer sentiment, and if you’d like to see how your consumers are responding, book a meeting with us. When you meet with us, you’ll gain a free month of premium content from CivicScience.