More U.S. homeowners no longer have home insurance, 'leaving them exposed to financial ruin'

National Association of Insurance Commissioners and Federal Insurance Office, Department of the Treasury map

Whether it's tornadoes, wildfires, torrential rains, flooding or atmospheric rivers, extreme weather has carved a path of destruction across the United States. The collective losses caused drastic increases in home insurance costs, leaving some Americans unable to pay, "threatening what is, for many people, their most valuable asset," report Christopher Flavelle and Mira Rojanasakul of The New York Times.

New government data shows how increasing numbers of Americans have "given up on paying their insurance premiums, leaving them exposed to financial ruin," Flavelle and Rojanasakul explain. "The rising cancellation rates are part of a broader trend captured by the Treasury Department, which analyzed information for 246 million insurance policies issued by 330 insurers nationwide from 2018 through 2022."

How and when home policies get dropped depends on a variety of factors. For instance, some homeowners don't have a bank or lien-holder, so they can take the risk and drop their insurance. When policyholders fails to pay their premiums, their insurance company will cancel their policy for non-payment. Other homeowners lose coverage when their insurance company refuses to renew their policy. Without home insurance, homeowners are exposed to possible financial ruin and homelessness.

The rates of cancellations and nonrenewals "are increasing, and those increases are most pronounced in high-risk areas," the Times reports. "In more than 150 ZIP codes around the country, insurers canceled at least 10 percent of home insurance policies in 2022, the most recent year for which numbers are available because homeowners failed to pay their premiums."

While the new information doesn't explain why homeowners have stopped paying for their insurance, "Nellie Liang, the Treasury Department’s under secretary for domestic finance, said her team viewed it as an indicator of families facing growing financial stress worsened by climate change," Flavelle and Rojanasakul write. 

FEMA high-risk flood zone maps don't 'reflect the risk of heavy rainfall,' leaving many property owners at risk

Flooding can close rural roads for days.
(Adobe Stock photo)

When tropical storm Debby drenched stretches of the northeastern U.S., it left roads, homes and businesses massively damaged or even washed away. The catastrophe spotlighted a continuing trend of extreme rainfall fueled by climate change hammering communities that were never considered a flood risk, reports Jean Eaglesham of The Wall Street Journal. "Growing swaths of the U.S. that have never before been flooded are now in danger of being swamped. . . .Yet the government’s official flood maps haven’t been updated to reflect rainfall risk."

Flood insurance is a separate policy purchase from standard home insurance and typically property owners use the Federal Emergency Management Agency’s official flood maps for flood insurance purchasing guidance, which may be unwise. Eaglesham writes, "FEMA maps show eight million properties in high-risk flood zones. . . .The actual number of homes facing such risk is more than double that, according to research firm First Street Foundation. Much of the difference is because FEMA zones don’t reflect the risk of heavy rainfall."

At a time when torrential rainfall is becoming more common, a jump in flood insurance purchases by property owners may seem logical, but that's not what's happening. "The National Flood Insurance Program, which provides the lion’s share of flood coverage, had 4.65 million policies at the end of July, down 1.4% from the previous year and a million fewer than the peak of 5.7 million policies in 2009," Eaglesham reports. "The vast majority of Americans don’t have separate flood insurance."

If few property owners are insured when extreme weather destroys a region, taxpayers end up footing a lot of the bill. "The nationwide flood-insurance shortfall means the cost of rebuilding often falls on the taxpayer—via disaster relief — or inundated homeowners themselves," Eaglesham adds. "Many homeowners have dropped flood insurance because of the federal flood insurance program's cost increases. . . . The changes resulted in some policyholders facing huge premium increases."

As flood risk changes and homeowner's flood insurance premiums are recalculated, sticker shock is a sticking point

More accurate flood data has changed insurance rates.
(Photo by Kellly Sikkema, Unsplash)

As the Federal Emergency Management Agency recalculates national flood insurance premiums to include more accurate data, insuring property in places like Valley City, Illinois, which was recently underwater because of another flood from the Illinois River, may not be financially possible for some residents," reports Kery Murakami of Route Fifty. "After FEMA made changes to how it sets premiums for the 5 million policyholders in its National Flood Insurance Program, homeowners in Valley City, an area that's hit a major flood stage seven times since 2002, will be seeing a major jump in their premium to cover their damages. . . . Over roughly the next ten years, the 91 single-family homeowners in Pike County, where Valley City is located, will see their premiums rise six-fold from $699 to $4,933."

FEMA's new way of setting flood insurance premiums will "more accurately reflect how much flood risk properties are facing. But in many areas around the country, homeowners will see their premium payments multiply several times," Murakami writes. "Up until now, the premiums had not considered how often an area was expected to flood in the future and didn't consider many types of flooding, like that from heavy rainfall. That's led to an unfair situation in which many owners of properties at risk of flooding have been paying 'peanuts,' said Chad Berginnis, executive director for the Association of State Floodplain Managers. And indeed, Pike County's single-family homeowners had been paying among the lowest rates of any county in the country, according to FEMA data examined by Route Fifty."

Lawmakers say flood insurance only helps if homeowners can afford to buy it. "Some members of Congress from areas where premiums will jump are balking at the prospect of NFIP policyholders paying thousands more for federal flood insurance. Raising premiums so sharply, they say, could discourage people from buying insurance and leave them vulnerable if a flood damages their home," Murakami reports. Federal law caps premium increases at 18%. "Those who are not paying as much as FEMA's new risk assessment says they should be paying will be on what the agency calls a 'glide path' until they reach their new premium level. . . . The agency estimates that the percentage of people paying the amount FEMA believes they should be paying will rise from about a third to 90% over the next decade."

Using a more accurate picture of where flooding has or is likely to occur to set premium costs has supporters. "Some changes should be made, said Berginnis. . . . The new premiums, for example, will not take into account steps property owners take to reduce the threat of flood damage," Murakami writes. "Still, he said, the new flood insurance rates will 'send people the correct signals about flood risk.'

Wildfire risk in California leaves many without home insurance; unclear whether trend will spread to other states

2020 wildfire risk map from Wildfirerisk.org; click the image to enlarge it or click here for the interactive version. 

After years of costly wildfires, homeowners' insurance in California has become more expensive, less comprehensive, and harder to get, report Katherine Chiglinsky and Elaine Chen of Bloomberg. More insurers are dropping clients and/or refusing to insure new policies in higher-risk areas. 

In October, California’s insurance regulator reported that insurers refused to renew 235,250 home insurance policies in 2019, a 31 percent increase from the prior year. In ZIP codes that had a moderate to very high fire risk, non-renewals jumped 61%, Chiglinsky and Chen report. "The deepening insurance crisis underscores how that market is trying to grapple with a risk that’s escalated in recent years, driven by what the California governor has deemed a climate emergency. Insurers say they can no longer shoulder the losses at current prices, so they’re seeking to raise rates for some homeowners. But insurers have also been dropping homeowners, refusing to renew policies in high-risk areas for fears that the losses would continue to pile up no matter how much they charge."

The trend leads many homeowners with no choice but to purchase pricey back-up options or move to more affordable (but still high-risk) rural areas, Chiglinsky and Chen report.

Walmart keeping customers 'street legal' by offering auto insurance policies in store, online

AutoInsurance.com display at Walmart

Taking one-stop shopping to another level, Walmart customers will soon be able to purchase auto insurance while in the store or on the company's website. Through a partnership with Tranzutary Insurance Solutions LLC's AutoInsurance.com, the retail giant and one of the biggest rural businesses, will receive promotional payments while "AutoInsurance.com receives a commission for every policy that is sold," Anna Prior reports for The Wall Street Journal.

"While it expects to offer the service nationwide in the coming months, Wal-Mart said the tool is available immediately in Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Pennsylvania, Tennessee and Texas, and will provide customers with multiple quotes from a group of national insurance carriers, including Progressive, Esurance, Safeco and The General," Prior writes. Customers can also use the tool to compare prices to their current insurance. (Read more)

Flood insurance rates in coastal areas are going sky high, as more homes are being added as flood risks

"A new law meant to stabilize the federal government's money-losing flood-insurance program is starting to send rates sky high, prompting a growing backlash in coastal areas," especially in rural areas, Siobhan Hughes reports for The Wall Street Journal. "The Biggert-Waters law, enacted in 2012 before superstorm Sandy hit the Eastern seaboard, requires that government insurance premiums for the 5.6 million property owners in flood-prone regions be set at a level that better reflects the full risk of flooding. It was prompted by cumulative losses that had ballooned to $24 billion for the National Flood Insurance Program.

One property owner, Bill Bubrig, of Plaquemines Parish, Louisiana, in the state's southernmost parish, where the Mississippi River meets the Gulf of Mexico, "estimated that flood-insurance premiums on his home will increase from $633 to $28,000 a year, with a big chunk of the increase hitting as early as 2014," Hughes reports. "The changes mean some owners must retrofit their homes or businesses—by raising buildings higher above the ground and taking other measures—to better guard against flooding, or pay rates that could surge to $10,000 and higher a year. Vacation homes are subject to new insurance rates starting this year, while primary residences already subject to flood insurance will get new rates in phases." (Journal photo by William Widmer: Burbig at his home)

To make matters worse, the government is "redrawing flood-zone maps that will classify more properties as flood risks," Hughes writes. "To soften the impact, some members of Congress are asking the Federal Emergency Management Agency, which administers the federal flood insurance program, to delay implementing parts of the law while lawmakers consider changes to limit premium increases."

But opting out of flood insurance isn't an option for most residents, "since flood insurance is mandatory for properties with federally insured mortgages," Hughes writes. "And there is little people can do to lower premiums shy of elevating properties, which likely would cost multiple tens of thousands of dollars." (Read more)

Study says more shale drilling could benefit economy; insurance companies fear risks

"Increased oil and gas production ranks at the top of the list of things analysts say the country can do to boost the sluggish post-recession recovery," according to a report by McKinsey Global Institute entitled "Game Changers: Five Opportunities for U.S. Growth and Renewal," Nathanial Gronewold reports for Environment and Energy News. The report suggests "that hundreds of billions of dollars could be added to the economy from shale oil and gas by 2020, and that the oil and gas industry could contribute substantially to the gross domestic product over the next seven years." (Marcellus Shale Project Documentary photo by Scott Goldsmith: Drilling site in Washington County in Pennsylvania)

The report says that "if allowed to proceed unimpeded and encouraged, oil and gas drilling and production growth could add $380 billion to $690 billion to the overall economy," Gronewold reports.
"A high volume of hydrocarbon production and other economic activities associated with it could contribute as much as 3.7 percent to national GDP by 2020."

"The report argues that the direct benefit to the oil and gas industry from shale exploitation could range from $115 billion to $225 billion by 2020, with the rest of the economic boost coming from an expected surge in manufacturing stemming from huge new reserves," Gronewold reports. "It lists petrochemicals, steel, paper and glass as industries most likely to experience a boost from expanded shale energy production. McKinsey estimates that as much as $1.4 trillion in new investments may be needed to realize shale's full potential -- investment that will come almost entirely from private sources, thus not burdening local or national public sector budgets." (Read more)

But safety concerns still linger, and some major insurance companies, concerned about potential hazards, "remain unwilling to take on fracking and well drilling risks in shale plays until operating, regulatory and legal liability issues become clearer," Peter Behr reports for E&E News. "Insurance providers want a clearer picture of the potential hazards of deep well hydraulic fracturing in U.S. shale plays as they weigh the costs of covering the risks -- or consider whether to provide insurance at all, industry officials and experts say."

Attorney Earl Hagström told Behr, "Environmental risk has been around for a long time. Insurance companies know how to deal with it. But there are a lot of unknowns (in shale gas operations), and a lot of conflicting information. If something goes wrong, how big a problem is it? It is an unresolved issue that will have to play out over the next few years, maybe longer. The insurers and the re-insurers are reticent to participate if they can't understand the risk. If they can't understand the risk, they can't price it."

Seth Chandler, a University of Houston law professor, told Behr "some operators or subcontractors may be going without drilling and fracking coverage. Standard liability insurance policies don't cover the fracking issues. If you frack and you don't have liability insurance that covers you, you're betting that nothing bad is going to happen. And if you believe the frackers, nothing does happen." (Read more)

N.M. horse slaughter plants claims it was the victim of arson, but still plans to open Monday

UPDATE, Aug. 5: A federal judge on Friday temporarily halted plans by companies in New Mexico and Iowa to start slaughtering horses. U.S. District Judge Christina Armijo issued a restraining order in a lawsuit brought by The Humane Society of the United States and other groups in a case that has sparked an emotional national debate about how best to deal with the tens of thousands of wild, unwanted and abandoned horses across the country. (Read more)

The lawyer for a horse slaughter plant in New Mexico said Valley Meat Co. was the victim of a weekend fire that is suspected to be arson, the El Paso Times reports. Lawyer A. Blair Dunn told the paper, "no major damage" was done to the plant, and referred to the fire as "an act of domestic terrorism." Dunn said plant owner Rick De Los Santos, citing safety concerns, will not appear Friday at a federal hearing for a lawsuit filed by animal protection groups to block the opening of the plant. Unless a judge issues a temporary restraining order Friday, the plant is expected to open Monday.

Dunn told Emily Younger, of KRQE News 13 in Albuquerque, the fire targeted the plant's electrical refrigeration system. “It did do some damage to the those refrigeration units which are a life blood and a critical component for the operation of the plant." He said one unit provides electricity to the entire plant and without it, the horse slaughterhouse can't function. “Very clearly someone knew what they were up to and tried to set a fire to disable those and potentially destroy the plant." Maintenance crews are expected to be able to replace the damaged refrigeration units in time for the plant to open Monday, Dunn said. (Read more)

Ohio drivers may soon be able to put the pedal a bit more to the metal on rural highways

Speed limits may be going up on rural highways in Ohio. Senators signed off on a proposal to increase the speed limit to 70 m.p.h. on rural interstate highways. The measure was added to a highway funding bill, reports Tom Breckenridge of The Plain Dealer in Cleveland.

The higher speed limit would apply to interstate freeways outside of urban areas, such as parts of Interstates 75, 70 and 71, writes Laura A. Bischoff of the Dayton Daily News. The limit on outerbelts in urban areas would be 65 and the speed limit would be 55 on interstates deemed congested by the state Department of Transportation.

Thirty-four states have raised limits to 70 or higher on some roads since 1995, writes Bischoff. We reported in 2011 that Kansas has raised speed limits to 75 on some roads. Texas has speed limits of 85 on certain roads and Utah has some with 80, according to the National Motorists Association.

Ohio lawmakers have pushed for the higher limits for years, but the idea faces opposition from environmental groups that say higher speeds reduce fuel efficiency and insurance groups that say it’ll increase danger on the roadways, reports Bischoff. A map from the Insurance Institute for Highway Safety shows maximum posted daytime speed limits on rural interstates.

Maine becoming the first state east of the Mississippi River with a 75 mph speed limit

It's no German autobahn, but motorists traveling Interstate 95 in Northern Maine probably won't be taking in the mountain vistas, bogs and acres of trees that line the highway quite as deeply, due to an increase in the speed limit on 110 miles of the road to 75 miles per hour from 65 mph. As the signs go up, Maine is becoming the only state east of the Mississippi River to have a 75 mph limit. (Associated Press photo: I-95 in Old Town, southern terminus of the faster zone)

Residents asked for the change, reports Glenn Adams of the Portland Press Herald. They told Adams no one followed the lower limit anyway and when state Rep. Alexander Willette went campaigning door-to-door last year in his northern district, people kept asking him to get the limit raised. When he drafted a bill, he found that the Maine Department of Highways had already completed studies about raising the limit and determined the change was justified. Because of residents' lax attitude toward the lower limit, the law passed quickly and quietly through the legislature.

Though residents and some in government approve of the change, others like insurance representative Anne Flemming told Adams the higher limit will encourage faster speeding and could cause more severe accidents. The American Trucking Association, which has previously lobbied for a national speed limit of 65 mph, say the issue is also an economic one for them because slower speeds help truckers save money on fuel. (Read more)

Scientists, planners, insurer: Weather extremes are 'global weirding' caused partly by humans

The Union of Concerned Scientists, which was formed to warn of the risks of a global nuclear holocaust, held a conference call with reporters yesterday to sound the alarm bell about global warming. Deborah Zabarenko of Reuters listened and wrote, "Heavy rains, deep snowfalls, monster floods and killing droughts are signs of a 'new normal' of extreme U.S. weather events fueled by climate change, scientists and government planners said on Wednesday."

"It's a new normal and I really do think that global weirding is the best way to describe what we're seeing," said climate scientist Katharine Hayhoe of Texas Tech University. "We are used to certain conditions and there's a lot going on these days that is not what we're used to, that is outside our current frame of reference."

"Hayhoe, other scientists, civic planners and a manager at the giant Swiss Re reinsurance firm all cited human-caused climate change as a factor pushing this shift toward more extreme weather," Zabarenko writes.