An Uninsurable Country

Millions of homeowners across the United States are being denied or priced out of property insurance coverage. 

It is estimated that between 7 percent and 13 percent of all homes in the country are uninsured, and that number is on the rise. Since 2020, 1.2 million property owners who were dropped by their insurance companies have had to secure higher-priced, less comprehensive insurance coverage from state-created insurers of last resort. Households that are still able to obtain traditional coverage are paying more and more for their insurance, largely due to rising incidents of severe convective storms, hurricanes, wildfires, and other climate-influenced disasters.

As risks continue to rise—and the potential for damage to people’s homes increases—we must recognize that very little of our built environment (i.e., our homes, businesses, public buildings, and infrastructure) was sited and designed with today’s climate and weather risks in mind, much less the risks of the next several decades. As these risks continue to mount, properties will become increasingly uninsurable. This is what an insurability crisis looks like.

An insurability crisis doesn’t appear overnight. Warning signs develop over many years, including: 

• Rising damage from climate-influenced hazards and disasters
• Rapidly increasing insurance rates and premiums
• Growing numbers of homeowners without insurance, due to it being either unaffordable or unavailable
• Rising enrollment in state-created insurers of last resort 

But these warning signs are helpful only if states heed them. Without leadership from state governments, the risks will continue to grow, the damages will continue to mount, and insurance will continue to become more expensive and less available. States are uniquely situated to address the burgeoning insurability crisis and have the tools to do this successfully—if they heed the warning signs.

States can and must play a growing role in: 

• Ensuring that building codes reduce the potential for damage from common natural hazards.
• Incentivizing retrofits of existing high-risk homes to standards that go beyond the minimum building code requirements.
• Funding climate resilience and risk-reduction efforts, including ensuring that insurance companies contribute to this much-needed work.
• Preparing state-created insurers of last resort for the future, making them an integral part of the states’ risk reduction efforts and not just the final resting place of the riskiest properties. 

If states are hoping that insurance companies are going to solve this problem for them, they should think again. As the insurability crisis continues to grow, states must meet the challenge and take the actions necessary to lower risks for their residents and communities; reduce the potential for future damage; and prevent properties, neighborhoods, and entire communities from becoming uninsurable.