{"id":1237,"date":"2025-07-11T09:53:02","date_gmt":"2025-07-11T09:53:02","guid":{"rendered":"https:\/\/ft365.org\/index.php\/2025\/07\/11\/worried-about-extreme-weather-home-insurance-can-provide-a-financial-lifeline-bankrate\/"},"modified":"2025-07-11T09:53:02","modified_gmt":"2025-07-11T09:53:02","slug":"worried-about-extreme-weather-home-insurance-can-provide-a-financial-lifeline-bankrate","status":"publish","type":"post","link":"http:\/\/ft365.org\/index.php\/2025\/07\/11\/worried-about-extreme-weather-home-insurance-can-provide-a-financial-lifeline-bankrate\/","title":{"rendered":"Worried About Extreme Weather? Home Insurance Can Provide a Financial Lifeline | Bankrate"},"content":{"rendered":"
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Key takeaways<\/span> <\/span> <\/h2>\n
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  • The frequency of natural disasters is increasing, and the cost to rebuild a home is at record highs. <\/li>\n
  • It\u2019s essential to maintain accurate records and document any impacts from extreme weather to support your insurance claim. <\/li>\n
  • Homeowners may have other recover options, such as FEMA disaster assistance, but they are likely to be a fraction of what an insurance claim would provide. <\/li>\n<\/ul><\/div>\n

    As construction costs reach record highs and climate change fuels more frequent and deadlier storms, home insurance plays an increasingly vital role in protecting homeowners\u2019 finances during an era of rising risk.<\/p>\n

    Last year, the federal government declared 90 major climate-driven disasters, nearly double the 30-year annual average, according to an analysis by the International Institute for Environment and Development (IIED) of data from the Federal Emergency Management Agency (FEMA). July and August are the months that have the most natural disasters, according to IIED.<\/p>\n

    As of early July, the U.S. government has declared 31 natural disasters in 2025 so far, including the July 4 flash floods in central Texas. This disaster has taken the lives of at least 120 people, plus over 150 people in central Texas are still missing. In addition to the tragic loss of lives, the flooding caused $18-$22 billion in damages and losses, according to an Accuweather estimate.<\/p>\n

    Having a home insurance policy won\u2019t stop extreme weather, but it can offer crucial financial protection when disaster strikes. Yet as insurers raise rates to cover their growing climate-related losses, homeowners are struggling to keep up with rising premiums, says Andrew Hoffman, a professor at the University of Michigan\u2019s Ross School of Business and School for Environment and Sustainability.<\/p>\n

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    Increased storm frequency and severity is the new normal of a climate-changed world \u2014 this is the conclusion of the nation\u2019s scientists, but more directly, it is the conclusion of the nation\u2019s insurers.<\/q> \u2014 Professor Andrew Hoffman, Ross School of Business and School for Environment and Sustainability, University of Michigan <\/cite> <\/p><\/blockquote><\/div>\n

    The cost of home insurance premiums \u201cis increasing rapidly around the country in response to extreme weather payouts,\u201d Hoffman adds.<\/p>\n

    The average annual premium for $300,000 of dwelling coverage was $2,329 in May, an increase of 8.4 percent from a year earlier, according to Bankrate calculations using data from Quadrant Information Services. That\u2019s more than triple the 2.4 percent gain during the same period in the government\u2019s Consumer Price Index, which measures overall inflation.<\/p>\n

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    Loan Home Improvement Icon<\/title> <\/svg> <\/p>\n
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    Financial impact of natural disasters <\/p>\n

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    The financial ramifications of natural disasters are profound and far-reaching. For most Americans, their home is the largest financial investment they will ever make. And, the cost of repairing or replacing it after a disaster is the highest it\u2019s ever been, according to the National Association of Home Builders. Average construction costs are now at a record $162 per square foot, the trade group said in a report earlier this year. Without sufficient insurance, homeowners could face steep out-of-pocket costs.<\/p>\n

    The Bankrate Extreme Weather survey illustrates how impactful natural disasters can be on individuals and communities:<\/p>\n

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    • 26% of homeowners said they are unprepared for the potential costs associated with a natural disaster.<\/li>\n
    • 43% of homeowners said they haven\u2019t done anything to protect their property from damage stemming from extreme weather.<\/li>\n
    • 15% of homeowners said they wouldn\u2019t have the financial resources to cover their insurance deductible if their home is damaged by extreme weather.<\/li>\n
    • 9% of homeowners said they moved to an area at lower risk of extreme weather within the past five years.<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

      Home insurance vs. federal disaster assistance<\/strong><\/h2>\n

      Faced with rising premiums and, in some disaster-prone areas, few insurers willing to write policies because of increasing risk, one in 13 homeowners is going without property insurance, according to the Consumer Federation of America.\u00a0<\/p>\n

      Homeowners who want to \u201cgo bare\u201d \u2014 the industry\u2019s term for forgoing insurance \u2014 will likely be disqualified for mortgage eligibility. Lenders typically require home insurance to protect their collateral. For most people, whether they have a mortgage or not, having their home destroyed or heavily damaged without insurance coverage would threaten their financial stability.<\/p>\n

      \u201cFor most American homeowners, their house is not only their home but also their largest financial asset,\u201d reports the Consumer Federation of America. \u201cWithout insurance, they are at risk of losing everything in just one disaster. \u201d<\/p>\n

      Some people believe that if their homes were destroyed, the federal government would step in to help them rebuild. There are two problems with that.\u00a0<\/p>\n

      First, financial grants from the Federal Emergency Management Agency (FEMA) typically are a fraction of what a home insurance policy will cover. For example, the average payout for FEMA\u2019s Housing Assistance program for temporary shelter and home repairs was $4,253 in the August 2017 to March 2024 period, according to a Congressional Research Service report last year. Meanwhile, the average cost to repair fire damage is $27,175 and storm damage is $12,346.<\/p>\n

      Another problem is that it\u2019s not clear whether FEMA will be around in coming years. President Donald Trump said last month that he plans to eliminate FEMA after the November 30 end of hurricane season.<\/p>\n

      \u201cWe want to wean off of FEMA, and we want to bring it back to the state level,\u201d the president said.\u00a0<\/p>\n

      The National Oceanic and Atmospheric Administration (NOAA) predicts that the 2025 hurricane season, which began on June 1, will have six to 10 hurricanes, with three to five being major hurricanes, meaning wind speeds of 111 miles per hour or higher.<\/p>\n

      \u00a0\u201cThis outlook is a call to action: be prepared,\u201d says NOAA\u2019s National Weather Service Director Ken Graham. \u201cTake proactive steps now to make a plan.\u201d<\/p>\n

      Insurance can be customized to address your home\u2019s risks<\/strong><\/h2>\n

      A standard home insurance policy may not provide adequate coverage, depending on your circumstances and where you live. Thankfully, home insurance is rather customizable. Bankrate\u2019s Extreme Weather survey reports that 29 percent of homeowners made a change to their insurance policy within the last five years to protect their property against damage from extreme weather. You may want to consider purchasing additional coverage or policy add-ons, known as endorsements, that can provide financial protection for a variety of disasters.<\/p>\n

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      • Flood insurance: <\/strong>Flood insurance isn\u2019t included in a standard home insurance policy. The average flood insurance claim is $68,000, so having flood insurance, even if you\u2019re not in a federally designated flood zone, could pay off after a natural disaster. According to FEMA, only about 4 percent of homeowners have flood insurance and 40 percent of claims come from insured homes outside of flood zones.<\/li>\n
      • Wildfire coverage:<\/strong> Some home insurance policies include coverage for wildfires<\/u>, but others require you to purchase additional coverage<\/li>\n
      • Earthquake coverage:<\/strong> If you live in an earthquake zone, you may want to purchase this endorsement<\/u>, since it\u2019s typically excluded from home insurance policies.<\/li>\n
      • Windstorm coverage:<\/strong> Most wind damage is covered by standard home insurance policies. However, in some parts of the country, you\u2019re more likely to have to purchase a windstorm endorsement<\/u>.<\/li>\n<\/ul>\n

        Filing an insurance claim after a natural disaster<\/strong><\/h2>\n

        If you experience a loss that is covered by your home insurance policy, you can file a claim, and you\u2019ll be reimbursed up to your policy limits, minus the deductible cited in your policy. In most cases, insurance will cover home improvements after a disaster \u2014 at least in part, assuming you have appropriate coverage.\u00a0<\/p>\n

        Home insurance<\/u> policies can help to pay for property damage caused by extreme weather, and a separate flood insurance policy will cover damage from natural floods. However, after large disasters, claims may take longer to be paid due to heightened demand. If your home repairs and other losses aren\u2019t completely covered by standard home insurance<\/u>, there are several ways you could get help for disaster relief.<\/p>\n

        Other ways to get financing for disaster assistance<\/strong><\/h2>\n

        If you need additional assistance with paying for home repairs or replacement after a disaster, you may want to consider the following options.<\/p>\n