Rising temperatures. Severe flooding. More intense hurricanes. Bitterly cold winters. Droughts and destructive wildfires. These kinds of incidents seem to be happening more frequently. 

Even most former climate change skeptics now acknowledge the world is becoming warmer. According to the National Oceanic and Atmospheric Administration, 2016 was the hottest year on record. And 2020 was the second-hottest. 

Sea levels are rising because of melting polar ice sheets, and the frequency and severity of destructive weather continue to increase. In the past 50 years, the number of natural disasters worldwide has risen more than 450%. And a report by the public policy consultancy Access Partnership estimates that the number of natural disasters will be up 37% by 2025. 

The rising sea level is affecting coastal areas all over the world. When the sea level rises, it’s not just those below the new high tide line who have to worry. Rising seas mean more potential flood events. Tidal flooding and storm surges become even more likely for low-lying coastal areas. 

Climate volatility and your home 

Many factors, including weather patterns where you live, can affect your homeowners insurance rates. 

The odds of your property sustaining damage are taken into account when your insurance premium is calculated. Climate change means those odds are getting worse. 

Higher premiums 

Because of increasingly severe weather events, insurance companies will inevitably incur more losses and pass down those costs to policyholders in the form of higher premiums. In the case of rising sea levels, homeowners in flood-prone areas face rising flood insurance premiums. 

And in wildfire-prone areas, it may be difficult to get insurance at all. According to the San Francisco Chronicle, some insurers are declining to renew homeowners policies. This follows years of record-setting wildfires in both size and cost, a trend scientists expect to continue as global warming accelerates. 

Insurance providers are watching carefully and adapting as needed. They are starting to: 

  • Forecast weather more accurately, analyzing risks down to specific regions 
  • Implement larger deductibles and fewer coverage options in high-risk areas 
  • Apply separate deductibles on some policies in areas prone to hurricanes, tornadoes, and wind and hail damage 

Financial incentives for climate resilience 

The insurance industry may someday offer incentives to homeowners who take measures to make their properties more climate resilient. These may include lower deductibles and more favorable premiums. For example, green homes could potentially receive discounted rates. 

The concept is similar to safe drivers receiving discounts because they are less likely to get into accidents that generate insurance claims. 

Customers who generate solar, wind power or geothermal energy can already reap the benefits of discounted premiums offered by some insurers. 

Along similar lines, some insurance companies are providing climate-related discounts in Firewise USA communities where residents are proactive in preventing wildfires. Every participating homeowner learns how to avoid fire damage and implements fire prevention methods, such as clearing property of brush, vegetation and other items that spread fire. 

How to prepare your home for extreme weather 

The best thing you can do to protect yourself from extreme weather losses and rising homeowners insurance costs is to avoid purchasing any of the following: 

  • Coastal property 
  • Property that lies in a flood zone 
  • Property in an area with frequent tornadoes, hailstorms or windstorms 
  • Property in a wildfire-prone region 

Of course, the home of your dreams (perhaps the one you already live in) may well fall into one of these categories. If your home is susceptible to weather-related damage, consider renovations that make it sturdier and more resilient. 

Here are some other things to keep in mind: 

  • If you live in a high-risk flood zone, you may want to opt for excess flood insurance. The National Flood Insurance Program allows you to get up to $250,000 in coverage for your home and $100,000 for your personal property. 
  • Does your policy cover “actual cash value” or “replacement cost” coverage? Actual cash value accounts for depreciation when it reimburses you for losses. But replacement value will cover the full cost of replacing damaged items, although it costs about 10% more on average. 
  • What are the caps and limitations on your coverage? The age of your roof may affect how much you’ll get toward replacing it, or your screened-in patio may not be covered. 

Keep in mind earthquake and flood insurance are not normally included in standard homeowners policies. 

If you haven’t completed a home inventory yet, do it now — before a catastrophic weather event. Having a list (and video or photo proof) of the things you own will help you get reimbursed if your house is damaged.

Review your coverage needs 

You may not be able to completely avoid weather damage related to a changing climate. But taking precautions and knowing exactly how you’re covered can help if disaster strikes. Contact your insurance professional to talk about your unique insurance needs.