Add tornadoes, wildfires and floods to the already long list of worries for American homeowners.
According to a new report from Bankrate, more than a quarter of homeowners (26%) say they are not financially prepared to cover the costs if extreme weather damages their home. Of those surveyed, 14% said they were not very prepared and 12% said they were not prepared at all, according to the personal finance site. These findings come as hurricane season reaches its peak.
“The fact that people are not prepared for this type of climate risk, on top of the amount of unknown risk that exists in the country, is really alarming in many ways,” Dr. Jeremy Porter, head of climate implications research at First Street, a firm that studies climate risks, told CBS MoneyWatch.
The Bankrate survey provides insight into the financial situation of homeowners in a climate where summers are getting hotterHurricane season is more active and wildfires are more destructive. As multi-billion dollar weather disasters become more frequent, homeowners will have to absorb some of the costs through higher insurance premiums, weatherization strategies and repairs.
In the Bankrate survey, 15% of homeowners said they would not be able to pay their insurance deductible without going into debt if their home was damaged in an extreme weather event.
Geographically, residents of the South (29%) and West (28%) reported the greatest degree of financial vulnerability to extreme weather, the survey found.
“People in the South are more likely to have homeowners insurance, so they’ll have to pay the highest amount, and their earning potential is actually lower,” said Shannon Martin, an analyst at Bankrate.
The evolution of the insurance market
It’s no secret that the insurance market is undergoing a rapid transformation. Insurers like Allstate and State Farm are pulling out States exposed to fires and coastal flooding or choose to increase their premiums, making homeowners coverage less affordable.
Porter said rates are likely to rise in the future, given that insurers have yet to fully factor climate-related costs into the housing market. “There will still be further increases in terms of additional costs, even for homeownership,” he said.
According to Bankrate, 7% of respondents said they didn’t have homeowners insurance. That number rises to 15% for people earning less than $50,000 a year. According to the Insurance Information Institute, 12% of homeowners didn’t have insurance in 2022.
How to protect your property
It’s important to understand the risks you face, experts say, especially since dealing with extreme weather is an unprecedented experience for most Americans.
“Homeowners may also be facing risks they haven’t faced in the past,” said Andrew Kruczkiewicz, a senior associate at the National Center for Disaster Preparedness, part of Columbia University’s Climate School.
Of those surveyed by Bankrate, 43% said they had taken no steps in the past five years to protect their home from property damage from hazardous weather, while only 9% of homeowners had invested in weatherproofing measures.
On the other hand, more and more homeowners are aware of the growing risks, Martin said. “What this survey told me is that more and more people are paying attention to what’s happening in terms of extreme weather.”
According to Bankrate, 39% of homeowners said they have reviewed their auto or home insurance policy to make sure they have the appropriate level of coverage.
“It seems like a simple, basic thing, but it’s honestly the first step everyone should take,” Martin said.
Martin recommends calling or making an appointment with your insurer to review your policy. A fire or flood, for example, may be covered one year and not the next, she said.
Martin also said people should check out First Street’s Risk Factor and Climate Check, tools that allow users to search their property and visualize extreme weather risks.
You can look at it and figure out the little, more affordable things you can do for your home to make sure you’re protecting yourself against these types of damages,” Porter says.
Get out while you still can
In some cases, mitigation strategies simply aren’t enough. Of those surveyed in Bankrate’s survey, 7% said they ultimately moved to a lower-risk area to reduce the risk of extreme weather.
The trend is relatively weak at this point, Porter said. “I expect that in the near future we will not see a massive migration at the macro level.” Still, more people are taking the risks into consideration and making informed decisions about climate, he added.
Joe Printz, a wine shop owner and former restaurateur based in New York City, is one of them. Printz bought a house in Napeague Harbor, on the South Fork of Long Island, New York, in early 2021. Just three years later, he and his partner are already considering selling it for fear it might one day end up underwater.
Made from six recycled steel shipping containers, assembled Tetris-style, Printz’s home, dubbed the “Beach Box,” is a formidable force against extreme weather. “I’m telling you, a tidal wave would probably just blow the windows out,” he said.
But even the most durable materials can’t keep the house from being devastated by flooding. If past storms are any indication, water from the ocean, located just two and a half blocks away in the case of Print’s property, will find its way in.
A local coastal resilience report predicts there is a 60 percent chance of a 100-year coastal flood event hitting this part of Long Island in the next 30 years, and that rising sea levels could turn East Hampton into a series of islands as early as 2070.
Printz doesn’t want to take any chances. “We’re going to renovate our house. We’re going to live there for another three or four years and probably sell it,” he said.
