Which states face the biggest risks to climate change?

There is no doubt that climate change will impact everyone’s future but as sea levels rise, temperatures climb and more hurricanes, tornados and forest fires hit the United States, it will impact some states harder than others. 

Recently, ValuePenguin used data from the Union of Concerned Scientists (UCS) and found that three states, Louisiana, New Jersey and Delaware face the biggest risks when it comes to climate change as it causes rising sea levels and chronic flooding. In addition to increased risk of damage to their homes, residents of these states may see their insurance costs rise as well as insurers factor in these increased risks. 

The Big Three

Rising sea levels and flooding are certainly an issue in states such as California and Florida due to the fact that they have hundreds of miles of coastline. However, the study found that the states of Louisiana, New Jersey and Delaware will have the highest number of vulnerable homes as a share of the overall housing stock in that particular state. Let’s take a quick look at each state:

Louisiana: The Pelican State ranks number one with roughly 1.3 percent of its 2 million houses being at risk of flooding as sea levels rise. The UCS estimated that over 26,300 homes will be at risk of chronic flooding due to rising sea levels by 2030.

New Jersey: In a distant second place, New Jersey will see 0.7 percent of its 3.6 million homes at risk of chronic flooding by 2030. This translates into 26,600 houses that may be in a flood zone as climate change takes effect. 

Delaware: The First State rounds out the top three with 0.6 percent of its 432,000 homes at risk of flooding by 2030. Roughly 2,500 homes could fall into the risky category for flooding in the not so distant future.

According to the data from the UCS, the number of at-risk homes in all other states comes in at 0.3 percent or less. This makes these three the biggest risk for flooding in the future. The states that come up next in the list are Maryland, South Carolina, Florida, Connecticut, New Hampshire and Alabama.

Climate Change is Impacting Insurance Rates Now

Insurance rates will most likely climb in the future as climate change escalates but they are already increasing in areas that have seen more and more severe weather events and forest fires due to increase temperatures.  

When insurers incur large losses due to a fire, hurricane or other weather related event, they pass those costs on to consumers via higher premiums. While homeowners in areas that are directly impacted by these events will see the biggest increases (and in some cases, cancellations) in most cases, all policyholders will see at least a small increase. 

There have been a number of examples of this happening in recent years, for example, Hurricane Harvey in Texas and the California Wildfire season in 2017. ValuePenguin took a look at these events and the resulting insurance rate hikes.

Hurricane Harvey: Hurricane Harvey was the second costliest hurricane in U.S history when adjusted for inflation. It hit Texas hard and did roughly $100 billion in economic damage. Unfortunately, for Texas homeowners, only $30 billion was insured. 

While flood damage is always excluded from a homeowners insurance policy, it does cover wind and hail damage and Harvey brought plenty of it. When it came time for rate changes in 2018, Texas insurers passed the costs of Harvey onto its customers with an average rate increase of 8.1 percent. 

A few of the insurers went well beyond the 8.1 percent with USAA raising rates a whopping 27.5 percent. Progressive and Chubb jacked rates up 14.8 percent and Travelers pushed rates up 11. 8 percent. These increases were by far the largest in the five years proceeding 2017. 

California Wildfires of 2017: California suffered a number of wildfires in 2017 and the property damage was estimated at $13 billion with $11 billion of that being insured. While this was a big year for wildfires, 2018 turned out to be even worse. While fire damage is always covered by a homeowners insurance policy, paying all of those claims forced insurers to push up rates. 

Insurers in California raised rates by an average of almost 6 percent for 2018. USAA policyholders saw the biggest increase with an average of 16 percent. Mercury General was in second place with an 8.4 percent increase and Nationwide rounded out the top three with 7.2 percent. 

What Can You Do?

While it’s not possible to mitigate the effect of climate change there are ways you can make it a little less painful. Here are a few tips to lower your premium:

Flood Insurance: If you live in an area that is prone to flooding, or may be in the future, make sure you have a flood insurance policy in place. You can purchase flood insurance via the National Flood Insurance Program (NFIP) or in the private market. NFIP policies do come with coverage limits so make sure you fully understand the policy and that your home is fully protected. Flood insurance can be expensive, but it can be a financial lifesaver if your home is flooded. 

Consider Moving: While this may seem extreme, if you live in an area that may be subject to chronic flooding now or in the future it may be worth it to move. Some states offer relocation programs to homeowners in high risk areas. There are also federal programs that can help with these types of expenses. Check with your local officials to see if this is a possibility. 

Update Your Home: Upgrading your home can result in major discounts from your insurer. These are just a few updates that may help:

• Storm Shutters: Adding storm shutters can reduce damage caused by wind and hail. Check with your insurer to see if adding shutters would result in a discount on your premium. 

• Wind Resistant Roof: Replacing your roof with one made from wind/fire/hail resistant materials can help lower your premium. Anything that lowers the risk of your home being damaged or destroyed makes your insurer happy and usually results in a discount.

• Sprinkler System: While a sprinkler system can be very expensive, it usually results in a major discount. These systems can help your home survive a forest fire or even a fire that breaks out due to electrical or gas line damage. 

• Shop Your Coverage: This is the best way to lower your premium. Insurers rate risk differently which can result in dramatic premium quotes. Shop your coverage on a yearly basis and get homeowners insurance quotes from at least 5 insurers.