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Wealth Planning

The intersection of climate change and the need to upgrade home insurance 

Climate change is impacting lots of choices that people make – even insurance. Keep reading to learn more about how homeowners insurance has been affected by climate change.

  • As climate change continues to heighten, many homeowners might be considering upgrading their home insurance to protect themselves from natural disasters.
  • In 2019, California was hit by a pair of earthquakes that resulted in insured losses of $44 million.
  • If you wish to get coverage for something like earthquakes or flooding, then you’re most likely going to have to purchase a separate policy.

As climate change continues to heighten, the possibility of more droughts and increasingly intense storms will arise. This could lead to natural disasters like wildfires, tornadoes and hurricanes. In light of this, many homeowners might be considering upgrading their home insurance to protect themselves from these natural disasters.

This is especially true for those who live in coastal areas where flooding is becoming more of an issue, or those who live in other areas that are largely affected by climate change. Furthermore, first-time homebuyers or those looking to buy a new home may want to take the impact of climate change into consideration.

Let’s take a look at some data about natural disasters in the U.S. and how that might affect home insurance for some homeowners.


Natural disasters in the U.S.

In the United States alone, 1.71 million people are forced to flee their home every year during a natural disaster.1 And in 2021, there were 20 natural disasters in the U.S., resulting in $145 billion in costs and 688 deaths.2

These events are only increasing in occurrence. Over the past 30 years, the average for natural disasters is 7.4 events per year, but over the past five years, the average has jumped to 17.2 natural disaster events per year.3

With figures that high, it’s no wonder that homeowners might find themselves trying to learn more about homeowners insurance, how to protect their homes from damage or how to avoid paying for expensive repairs.

Homeowners insurance and natural disasters

Building a sustainable home is one way to cut back on costs while continuing to be environmentally friendly, but for those who know that their home is in a danger zone for natural disasters, homeowners insurance and additional insurance policies can be one way to combat any potential damages.

While many natural disasters like fire or lightning are typically covered in homeowners insurance, other natural disasters – like floods, earthquakes, maintenance damage and sewer backups – aren’t typically covered.

If you don’t live in an area where flooding is common or likely, and you don’t live on a fault line, then maybe purchasing coverage for these types of natural disasters doesn’t make sense for you. However, maybe you live in California, where earthquakes are just a part of life. Or maybe you live in New York City, where hurricanes or even a strong thunderstorm can result in flooding. Then, you might be interested in insurance that covers these specific types of disasters.

These types of disasters are totally unpredictable, and aside from being dangerous, they can be costly. For context, in 2019, California was hit by a pair of earthquakes that resulted in insured losses of $44 million.4 The National Flood Insurance Program (NFIP) states that 90% of all U.S. natural disasters involve flooding.5 Just one inch of flood water can cause as much as $25,000 in damage to a home.6 Between 2010 and 2018, the annual cost of flood damage in the United States was approximately $17 billion.7

If you do wish to get coverage for these types of disasters, then you’re most likely going to have to purchase a separate policy. When it comes to flood insurance, it’s available through the NFIP and from a few private insurers. As far as earthquakes, coverage is usually offered as a separate policy through most insurers.


1.Our World in Data, “Natural Disasters.” (November 2021)
2.NCDC, “Overview.” (2022)
3.NCDC, “Overview.” (2022)
4.Insurance Information Institute. “Facts + Statistics: Earthquakes and tsunamis.” (2021.)
5.GovInfo, “National Flood Insurance Program: Oversight of Policy Issuance and Claims.”
6.FEMA, “Flood Insurance.” 
7.FEMA, “Testimony of Michael Grimm Assistant Administrator for Risk Management Federal Insurance and Mitigation Administration Federal Emergency Management Agency U.S. Department of Homeland Security.” (February 2020)


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