The Cool Down
Homeowners outraged after major insurance company announces it won’t renew nearly 1,300 policies — here’s what you need to know
Jenny Allison – October 23, 2024
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For many Oklahoma homeowners, November is ushering in the need to find new insurance coverage at a time when it seems many options are either too expensive, insufficient, or simply nonexistent.
What’s happening?
The reason behind their predicament is that Farmers Insurance has decided not to renew certain policies due to wildfire risk, Newsweek reported. Now, around 1,300 homeowners are scrambling to find new coverage, as their policies are expiring in November.
“As housing prices have swelled as have the costs to replace them, so too have insurance prices to cover potential damage,” Newsweek quoted Alex Beene, a financial literacy professor at the University of Tennessee at Martin.
“And when you mix those increased expenses with a home in an area that is highly likely to encounter some type of natural disaster, it’s forcing insurance providers to raise premiums to unfathomable heights or just drop coverage completely.”
Why is this pattern concerning?
While Farmers is choosing not to renew the selected policies due to wildfire risk, other states are seeing the same issue over risks of hurricanes, flooding, tornadoes, or other extreme weather-related events.
Unfortunately, scientists have found that these events are projected to grow even more intense as a direct result of our warming climate. And unless those temperatures slow down soon, wildfires and storms will continue to grow in severity.
For homeowners, losing coverage can mean having to enroll in a more expensive policy; in some cases, when no such policies are available or affordable, it can mean having to move towns or even states.
“Not only are they living in a property that won’t be covered in the case of damage, but the odds of them being able to relocate and sell that property go down considerably based on that same circumstance,” Beene told Newsweek.
What’s being done to protect homeowners?
Ideally, smaller insurance carriers in a market like Oklahoma’s could “come and pick up the pieces” left behind by a decision like this, Newsweek explained. But with carriers fearing increasing costs, many homeowners will instead see soaring premiums or be forced to use subpar providers.
Some states offer a state-managed plan, but it’s essentially a “last resort” arrangement and isn’t currently structured to withstand covering thousands of homeowners per state.