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The U.S. homeowners insurance market is under growing strain due to the increasing frequency and severity of climate-related disasters. Discussions around dismantling FEMA and overhauling the National Flood Insurance Program have heightened concerns among homeowners, lenders, and local governments already struggling with inadequate coverage and preparedness.
California’s insurance market is particularly affected, following devastating wildfires in January that caused over $52 billion in losses and destroyed thousands of homes. Even before the fires, insurers were pulling back from high-risk areas like Altadena and Pacific Palisades, where nonrenewal rates and premiums rose sharply above the national average. As a result, reliance on California’s FAIR Plan, the state’s last-resort insurer, has more than doubled, and the plan now faces $4 billion in claims and a $1 billion emergency assessment.
Premium hikes are also spreading nationwide. State Farm, for example, is raising home insurance rates by 27% this summer, citing inflation, severe weather costs, and supply chain pressures. With wildfire and hurricane seasons ongoing, experts urge homeowners to focus on mitigation strategies, like fire-resistant upgrades, that can improve insurability and qualify for discounts.
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