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Climate change reckoning

Orman believes that the price of insurance is just going to go up as extreme weather events take place more often across the U.S..

In 2023, there were a record 28 weather and climate disasters that cost at least a billion dollars, according to the National Centers for Environmental Information. The droughts, floods, cyclones and more caused damages worth a total of $92.9 billion.

As Americans endure these extreme weather events, home insurers need to keep up with the rising losses and escalating risks. So they keep raising their prices.

Bankrate discovered that the average homeowner insurance premium shot up 23% from 2023 to 2024. It's now $1,759 per year ($146.58 per month) for a policy with $250,000 in dwelling coverage.

“Climate change is going to make a big difference in people's desire to own their own home,” Orman told DailyMail.com.

It’s especially bad if you live in Nebraska, Oklahoma and Kansas, where the average cost is over $4,000 a year, the Bankrate analysis adds.

Out of the 28 high-cost extreme weather events last year, 8 affected Oklahoma, according to the state’s local KOCO 5 News. So you can understand why insurers would be asking for a big premium to take on that risk.

Some states have become so prone to extreme weather that insurers have pulled back from their coverage there. Wildfire risk is a big part of the reason both Allstate and State Farm did this in California in 2022 and 2023, respectively, according to the Associated Press.

In Florida, where Orman bought her condo and there's a high risk of hurricanes, the homeowners insurance market is collapsing and the state-backed insurer has been called "not solvent" by Gov. Ron DeSantis in a CNBC interview.

Stop overpaying for home insurance

Home insurance is an essential expense – one that can often be pricey. You can lower your monthly recurring expenses by finding a more economical alternative for home insurance.

Officialhomeinsurance can help you do just that. Their online marketplace of vetted home insurance providers allows you to quickly shop around for rates from the country’s top insurance companies, and ensure you’re paying the lowest price possible for your home insurance.

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What’s a homeowner to do?

But even with these increases in premiums, most American homeowners want to have some protection for their home — many of which are very expensive right now.

For a personal finance author, it’s hard to help people in this situation.

“I never would have thought to advise homebuyers 'oh you better make sure that you can afford a quadrupling of property insurance in the future,’” said Orman.

But apparently, that’s what you need to do now — unless you can already afford to self-insure.

One of the best ways to prepare for insurance premium hikes is to save up now. Bulk up your emergency fund so you know you’ll have the extra money. And if your insurer doesn't end up raising prices, you can put that money toward something else or invest it.

The experts at the Insurance Information Institute also recommend choosing wisely when you buy a new home. For instance, they say if you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster. They also suggest making your home more disaster resistant to save on your premiums.

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About the Author

Sabina Wex

Sabina Wex

Reporter

Sabina Wex is a writer and podcast producer in Toronto. Her work has appeared in Business Insider, Fast Company, CBC and more.

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