How Climate Change and Natural Disasters Impact Your Insurance

Unless you’ve been living as a hermit for the last ten years, you are aware of the problems climate change has caused worldwide. Catastrophic floods, unprecedented heat waves, out-of-control wildfires – these and other natural disasters have been in the news daily.

We can no longer deny the impact we have on our environment. Many decades of using our natural resources without regard to the effect on other regions and species has had a direct impact on our environment and daily lives, including the values of our property. The cost of the insurance that we purchase for ourselves, our families, and our businesses is also negatively affected.

We must extend our instinct for self-preservation to include the environment, and make the necessary changes to our plans and actions. Going forward, denial is not an option.

Here are a few of the ways insurance coverage will change as the impact of the climate crisis continues to affect us.

Heatwaves

The excessive warm temperatures worldwide – 2023 is on track to be the hottest year in recorded history – have prompted spikes in utility bills and food costs. It has caused droughts, melted ice caps, and raised ocean temperatures, causing terrible ecosystem changes to coral reefs and other wildlife habitats. More species are going extinct, resources are growing scarce, and the world is seeing a higher frequency of natural disasters than ever before. Local changes and impacts mean that insurance costs will increase to handle the more frequent deaths, injuries, and property loss caused by heat waves, rising food insecurity, and the diminishing amount of drinkable water.

Floods

Until recently, when hearing about a flood most people have thought, “Good thing we don’t live there! We will never be flooded out." But this is no longer as certain. Vermont had record-breaking flooding earlier this year. Recently a city in Massachusetts experienced over 6 inches of rain in less than a few hours. Businesses and properties were ruined. One business owner said, “I have experienced a massive power failure for days. COVID… And now this flood. This is the worst! I don’t know how I’ll recover.”

Most homeowners and businesses have no flood insurance unless mandated by a lender, government agency or law. With natural disasters occurring more often, and in places they’ve rarely happened before, this could change.

Wildfires

Wildfires have been burning around the globe. Smoke from Canadian fires affected air quality across upper North America as the flames consumed over 10 million acres of land. In Hawaii, fires burned an entire town, killing people and completely destroying homes and even boats in the harbor. Losses from these fires and other natural disasters are incalculable.

Weather phenomena like hurricanes and tornadoes are also increasingly influenced by climate change, and the destruction of life and property in their wake is a tragic consequence. Natural disasters such as earthquakes, which may or may not be directly related to climate change, have had an impact as well. All of these events affect insurance coverage and rates.

While we may become accustomed to these events, and although mainstream media may sensationalize the coverage of their aftermath, the impact on people's lives is real. We need to work together to address these serious issues. Even those of us who aren’t directly affected by the devastation will experience the impact these events have on the overall economy.

The effect on insurance is significant – increases in the cost of premiums and decreases in coverage options are happening for all of us. For example, businesses and organizations covered by group plans may see significant increases even if they have not been directly affected.

Whether we live on the West Coast, the East Coast, in the Midwest or the South, we are all paying the costs of climate change – including the cost of insurance. Review your policy coverage regularly. Do everything you can to reduce your carbon footprint and live sustainably. This is how we will protect our future.

As always, we are happy to work with you to determine what is the most appropriate and cost-effective coverage for you. We will help you stay on top of all these changes.