US Homeowners Facing a Home Insurance Crisis
The wildfires in Malibu and Pacific Palisades communities of Los Angeles are the latest threat to the home insurance sector across America.
The situation is well-documented yet reports don’t always cite the real underlying causes of the high cost. Hurricanes can’t be prevented of course, but the situation in the state of California is predictable given the conditions in the mountains there. The cause and solution involve cost, which might not be avoided any longer.
Either way, home insurance costs across America, and specifically in California and Florida are rising fast. Homeowners are desperate for home insurance coverage that might not be available any longer.
Who Will Pay for Rocketing Insurance Costs in America?
Insurance in the view of insurance companies is moving to a regional product, and California, Texas, Colorado and Florida homeowners and renters will not be subsidized by the other states. This will raise home insurance rates there even higher.
Whether it’s crumbling condo towers in Miami, leveled neighborhoods in California, or Hurricanes through Texas, people are moving to and living in very high-risk regions within very expensive homes and high-tax communities. And we know that very little has been spent on prevention/maintenance in some regions. The media/government have diverted attention with “climate and carbon” excuses that don’t resolve the matter.
America’s infrastructure and maintenance services have been neglected and the bills for that are coming in, at the worst time, when US debt is also out of control like a California wildfire.
Home Ownership Costs Becoming Impossible
The issue with insurance coverage is an added threat to the future of housing. Given the unaffordability of homes, builders will be reluctant to build in California or Colorado where wildfires are so prevalent.
With the price of real estate rocketing every year, this added a layer of cost must be passed through home insurance policies. If we watch the aftermath of the Malibu/Pacific Palisades, we get a clearer picture of the issue from homelessness to financial and human loss, to the cost of rebuilding, and the value of prevention which is another layer of cost.
Accuweather predicts the cost of these latest California fires to be 50 to 60 Billion dollars, numbers the debt-ridden state simply can’t afford.
“This is already one of the worst wildfires in California history…it may become the worst wildfire in modern California history based on the number of structures burned and economic loss,” said AccuWeather Chief Meteorologist Jonathan Porter.
The cost is so shocking that many Californians might be rethinking their political choices and the Federal Government may no longer be able to fund CA’s entitled local governments. The purpose and role of government is about to change.
One big cost is the possibility of no insurance for homeowners. Meaning, the next fire is totally on them – they lose it all.
The cost of insuring property in these areas is passed through to the American people and perhaps abroad as American insurance companies scramble to find money to fund those high-risk policies. Apparently, US insurance companies aren’t. Instead, they’re changing underwriting rules, excluding perils, passing risk onto policy holdrs, rates rates, and even dropping coverage for high-risk regions. Homeowners are aggressively on the hunt for affordable home insurance policies.
Home Insurance Policy Cost
This chart below from the Guardian shows how high home insurance premiums have risen (+$500/month nationally) during the pandemic era. And we know 2024 was a significant disaster year and premiums have risen far above this. Risk is highest in the west (California, Colorado, Nevada) and Southwest (Florida, Oklahoma, Texas), all highly populated states.

According to a CNBC report, nationwide, the average home insurance premium in February 2024 was about $141 a month (per $250,000 worth of dwelling insurance). That’s up a staggering 23% vs January 2023. The average cost of homeowners insurance in California is $1,250 per year, or about $104 per month. That’s 35% less than the national average of $1,915. For those who make any claims, coverage rises by about $200 annually.
For an increasing number of Californians and Floridians, the dream of owning a home has ended. Insurance is required for most home loans. For many, home insurance is becoming more expensive than the mortgage payment itself.
The challenge for home buyers and home owners in Florida, Texas, Colorado is extreme, making home insurance the toughest part of homeownership and wealth creation. Renters too will feel the pain as rates rise and costs are passed on them.
See more on the California housing market and Florida housing market which are being impacted by the costs of natural disasters.