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Home sales across the nation have already been hampered by high mortgage rates, and now insurance firms are raising home premiums to the point where buyers are beginning to hesitate.
According to The Wall Street Journal, homebuyers are frequently canceling contracts in flood-prone Florida or California, where wildfires have decimated the state.
Home insurance firms have raised their rates in response to extreme weather disasters or have completely withdrawn from some high-risk regions.
According to the Insurance Information Institute, a body that represents the insurance industry, the average annual home insurance premium in California is currently $1,300, an increase of 16% from 2019 levels.
The state’s FAIR Plan Association, which was created for California homeowners who cannot get insurance in the conventional market, has seen enrollment numbers roughly quadruple since 2019. This is because more insurers have left the state’s borders.
If that seems like a lot, Florida is the place to compare it to. According to data from the Insurance Information Institute, the average homeowners insurance premium there is currently $6,000, up 200% from 2019.
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Impact on Homebuyers in Risky Regions
Federal flood insurance, which is required in some parts of Florida, is now more expensive. The bulk of flood insurance coverage are provided by the government-run National Flood Insurance Program, which recently increased premiums to reflect the amount of risk.
According to government data examined by the Journal, the average yearly flood insurance premium for waterfront residences in Cape Coral, Florida, increased from $1,791 to $4,728.
Nonetheless, despite rising insurance costs, Americans continue to relocate to disaster-prone areas. The draw of cheaper housing, more accessible housing, and brighter weather has surpassed the problems and concerns of floods or fires.
Insurance “is definitely having an impact on home purchases,” said Alexandra Glickman, managing director of real estate & hospitality at insurance company Arthur J. Gallagher & Co., adding that it “is going to continue to happen.”
According to LinkedIn, Glickman has over three decades of expertise in commercial insurance. He claimed that the rising cost of home insurance premiums “is laying a damp towel” over the prospects that buyers have for disaster-prone places.
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Source: MSN
