Homeowners Insurance Nonrenewals Surge Amid Climate Risks in Florida, California

Recent analysis by Weiss Ratings reveals a significant increase in homeowners insurance policy nonrenewal rates across several U.S. states, driven by insurers' risk mitigation strategies as climate change contributes to more frequent and severe natural disasters like wildfires and hurricanes. Florida tops the list with a nonrenewal rate of 3.35% in 2024, nearly double compared to six years ago, followed closely by California at 3.18%. Overall, nonrenewals increased to 2.32% in 2024 across 15 states examined, up from 0.8% in 2018, illustrating a broader trend of insurers withdrawing coverage to limit exposure to catastrophe-related claims. This withdrawal contributes to challenges in the homeowners insurance market, increasing financial risk for policyholders who face fewer affordable options or could be forced to remain uninsured, a significant consideration given the mandatory nature of such insurance in real estate transactions. Despite rising policy cancellations, analysis indicates that insurers are currently experiencing higher profit margins, suggesting factors beyond claim payouts, such as regulatory constraints on rate increases or internal company policies, influence coverage decisions. The report suggests that homeowners should seek insurers with better claims payment records to secure more reliable protection. This trend has profound implications for insurance providers, regulators, and homeowners, highlighting the tension between maintaining financial solvency in a changing climate and ensuring market stability and consumer protection.