fire insurance cost is high--if you can get it

What does increasing natural hazard risk that is going through the roof do to your property insurance costs? Well, there is another roof, the one on your home that burned down or one still in a threatened area. Insurance policy prices are going up exponentially. One example given in this Los Angeles Times story, First, they lost their home insurance. Then, L.A. fires consumed their homes the previous cost of an annual policy was $4,500 and that moved up to $18,000.  This is very similar to the price increases many Florida homeowners have faced as hurricanes have become more routine.

Besides those types of policy cost increases you have insurance companies dropping customers. From the same article, “The state’s largest home insurer, State Farm General, announced in March that it would not renew 30,000 homeowner and condominium policies — including 1,626 in Pacific Palisades — when they expired.” That company dropping that many policy holders shows that they understand their risks by continuing to offer property insurance in high-risk areas. I think other companies, either after experiencing huge losses or seeing the potential to have big losses, will also withdraw from various markets around the United States.

There is also a double whammy for people who lost a home. The rental market rate is now off the charts in LA with monthly rents being up to $16-25K per month. I don’t know the size or value of such properties, but only the wealthy can afford those types of payments.

An insurance reckoning is coming!