Coastal insurance carriers are significantly raising deductibles for homeowners’ policies in response to escalating climate risks, particularly in hurricane- and flood-prone regions like Florida, Louisiana, and Texas. As climate change intensifies extreme weather events—such as hurricanes, storm surges, and flooding—insurers face mounting losses, prompting them to adjust risk management strategies. For example, in high-risk coastal areas like Miami Beach, deductibles for hurricane-related damages have risen sharply, with some policies now requiring homeowners to cover 5–10% of their home’s insured value before insurance kicks in, compared to flat deductibles of $1,000–$2,000 a decade ago.
A 2023 National Association of Insurance Commissioners survey revealed that major insurers, including Allstate and Nationwide, are implementing higher wind, hail, and tropical cyclone deductibles or excluding these perils entirely in coastal states. This follows record-breaking insured losses, such as $78.8 billion from extreme weather in 2023 alone. Reinsurers, who back primary insurers, have also raised premiums by up to 300% in some coastal markets post-Hurricane Katrina, further pressuring carriers to shift costs to policyholders.
Rising sea levels, projected to increase by 10–30 inches by 2100 per the IPCC, exacerbate risks to coastal infrastructure and properties, with 335,000 Alabama properties and 39,700 Delaware properties at substantial flood risk by 2050. Insurers are retreating from high-risk zones, leaving state-run “insurers of last resort” like Florida’s Citizens Property Insurance to fill gaps, often with higher deductibles and limited coverage. For instance, Louisiana’s Citizens plan saw a 63% rate hike in 2024, with deductibles for named storms reaching $10,000 or more for mid-sized homes.
These changes disproportionately impact low-income households, who struggle to afford higher out-of-pocket costs or premiums, which have risen 46% nationwide from 2001 to 2006, and up to 500% in parts of Florida by 2006. Some carriers now exclude flood or wind damage, forcing homeowners to purchase separate, costly policies. Critics argue this encourages development in risky areas by masking true costs, while others note that insurers’ risk models, incorporating climate change predictions, aim to ensure solvency amid projected $18 billion in annual port infrastructure damages by 2100.