The home insurance market is crumbling in New Orleans, leaving Alfredo Herrera with few options for coverage — and skyrocketing insurance premiums.
Herrera, 35, works in finance for a local bank. He bought his 900-square-foot home in New Orleans’ Mid-City neighborhood in 2020 for $270,000, and lives there with his partner.
In 2022, he paid $1,600 a year for home insurance. But last July, his insurer canceled his coverage, saying it was leaving Louisiana.
In the past, acquiring or keeping homeowners’ insurance didn’t present much of a problem.
But as climate change increases the frequency and severity of extreme weather, insurers — especially those in areas most impacted by floods and fires — are raising their premiums, or pulling out altogether, impacting the affordability and availability of home and fire insurance.
For those that live in those areas, sadly you have really two choices. Move. Or go without insurance.
It sucks but that’s reality. The government couldn’t even afford to cover those homes. If it were one home in a danger zone then it would be feasible. But with the number of homes, businesses and other buildings it just isn’t feasible. We need to start working to get these people out of there. If we start now it can in theory be done but the longer we wait the more impossible it will become.
I’m sure you know we’re not going to do the right thing for anyone in the coming years. We won’t do anything to avoid the disaster and we won’t give a shit when disaster strikes others either. Greed and selfishness will be the end of us. We’ll all just say “Thank God it wasn’t me” until eventually it is.
Very true
Absolutely prophetic.
Man whenever a hurricane is in the gulf and my family is all like “pray it doesn’t come our way” I’m just like… so you’re asking God to ruin someone else’s life? Shit is insane.
Laughs in Dutch Deltaworks.
The government would easily be able to fix this, by properly protecting the city from the ocean by building adequate protection measures. But it failed to do so… and this is the result. The constituents voted for short term cost savings over long term viability of some of their large population centers.
Unfortunately we don’t currently have a Dutch government that believes in climate change, luckily our water defense is managed by an even older branch of government that does still know it’s core function.
Bold of you to assume that the coral basin of Florida an Louisiana would not let water bubble up from the soil as it rises.
Why? It’s not as if this problem is unique. Other environments, other challenges. It’s not as if that is not a solvable issue.
You just reminded me that there’s a version of Pandemic inspired by this, it’s actually really fun
Wow, their brand really is “visions of the future” now isn’t it?
Cool! I just went online and bought a copy. Had not heard of it, but it seems fun.
This is the thing I wish we could see more of. Why are people stuck on this idea that they have a “right” to live in the spaces even though the economics say otherwise? It’s time to rebuild our urban cores and keep everyone out of the forests except for recreation.
You have a right to live there. I have no problem with people living in these areas.
What I disagree with is the expectation that the rest of society pay for that right when it’s an area that you know will get damaged.
With insurance (not that I’m in favor of private enterprise profiting off your potential for catastrophe) that cost was spread out over you and your neighbors, maybe even some of the rest of the insurers customers, with increased premiums.
But if you choose to stay in a known disaster-prone area where homes are expected to be wrecked fairly regularly, society (the taxpayer) shouldn’t be on the hook for that.
(I say “fairly regularly” I don’t mean someplace that might get a random tornado, but places that are regularly impacted by hurricanes such as the East/southeastern coastal areas, flooding along the Mississippi, etc.)
I’m not sure about Louisiana but where I live, you can’t get a mortgage if you can’t get insurance. That means in order to move, you have to find a buyer that will pay cash.
Otherwise you’re screwed.
They could form a co-op and insure each other. Except the insurance companies bought state legislators (at rock-bottom prices!) and made that illegal.
¯\_(ツ)_/¯
I like when people think outside of the box
but let’s think about that concept.
you , myself, and 22 others live in a high risk flood zone. the insurance companies won’t insure us because of the high risk.
if we (the 24) try to insure ourselves, there is no way to gather enough premiums to offset the losses.
think about it, the insurance companies will insure LARGE numbers of homes. then use the premiums to pay for losses on a few of those homes. so when someones house burns down or gets destroyed by a flood there is money in the bank to cover the loss. but since it is a smaller number of people putting in premiums, there is a smaller amount of money in the pot to cover the loss.
all the homes are in a high risk flood zone, it wouldn’t take much for all the homes (in the co-op) to be destroyed in the same flood to wipe out the pile of cash and not have a way to rebuild.
i like your idea but the end result makes in a solution that just won’t work. sorry.
If we start now it can in theory be done but the longer we wait the more impossible it will become.
While I agree with your assessment this is a statement about mitigating the damages of climate change that has been repeated for at least 40+ years. And… well… we’ve seen how well that’s turned out.
I was under the impression that insurance was needed to secure a mortgage. I live in an area that doesn’t have these issues but my mortgage provider was very clear to me that home insurance was a requirement of the mortgage. Maybe it was the mortgage provider I used? I thought everyone had that requirement. I live in an area with just about zero natural disaster concern or climate change concern.
In most cases it is. And since the insurance company won’t insure the property basically becomes unsellable
For those that live in those areas
Which areas? There’s almost nowhere that coverage won’t be a problem because of climate change within the next decade.
There are areas that will be much worse. In Minnesota we will see some issues but trust me, we basically won’t see massive flooding. The tornadoes might and probably will get worse but we won’t see entire towns removed because of flooding or massive fires. Iowa, North and South Dakota, Wisconsin will also be fine.
It’s low lying coastal area that will get crushed. Also going to (for example) the East side of California could be problem areas. We will have to live in a smaller section of area.
Not sure who downvoted you though
Tornadoes have definitely destroyed entire towns. And recently. So I would say Minnesota is at risk from that.
https://en.wikipedia.org/wiki/2021_Western_Kentucky_tornado
As for who downvoted me… probably some idiot who doesn’t believe in climate change.
Fair enough entire towns have been wiped out. Can’t argue that but on the big picture side of things, I’d say coastal areas are going to get hit way worse
Way worse for sure. I’m just pointing out that almost everywhere will have to deal with climate disasters bad enough that it will destroy the home insurance industry.
And going without insurance typically isn’t an option if you have a mortgage
I wonder how hard would it be to start a local co-op insurance company. I know next to nothing about finances or insurance, but I bet there’s a way to do it.
Insurance is all about socializing the cost of recovery (and taking a cut for yourself on the way) by getting a pool of people to pay in. If all the people in the pool are in a small, flood-prone area, the costs would likely be no different than no insurance. You have to get the pool to include people that will never file a claim to help cover the others.
Right, I was more thinking along the lines of a community effort to help each other in case of disaster. With that said, moving out of a high risk zone is definitely the smarter move IMO
Could you? Yes.
But you wouldn’t want to insure anyone or anything in those high risk zones. You’d go broke.
A problem that solves itself. We don’t have to do anything.
Insurance rates are the true Canary of Collapse. If the money men have calculated that certain areas are going to quickly become unlivable, then people should listen.
Of course it’s not trivial to just pack up your life and move but it’s about to become super necessary, unfortunately.
Yeah but just picking up your life and leaving isn’t always a possibility simply because you have so much investment already where you’re at. I mean how the hell do you get any of the money that you have invested in the home… it’s uninsurable who do you sell it to.?
You’re completely right. Many people are about to get totally financially ruined at a minimum. There’s going to be a lot of climate refugees from these areas who’ve lost everything.
Eventually someone is left holding the bag on any house really. Unless the property increases in value past the value of the house, then it can be torn down and a new house built while keeping the price comparable to other nearby homes.
Yes but in this context it about the scope of the situation. You are not talking about just one person left holding the bag. We are talking about entire towns soon maybe states. At what point do we actually step in as a country . you have huge swaths of people that are not going to be capable of financially moving on because they have sunk all of their everything into that ground and you’re telling them they have to basically abandon it. That will not go well.
All the poor fuckers who don’t have a house aren’t going to have the government find them one and hand them to it. Replacing 5% of the single family homes would cost about 2T given that houses aren’t worth the same, the unit replacement cost on rich kids houses is going to 2-3x the cost of an average house AND the fancy real estate’s propensity to be situated near water in what will be future flood plains the majority of that money will go to those who already have the most advantages.
Conversely if those people aren’t absolute morons those properties are absolutely saleable at this point irrespective of it being expensive to purchase insurance. If your property is bound for the bottom in 20 years sell it now while people aren’t too cognizant of this issue before your fortunes go down with the ship.
I can’t really say what will happen. Neither can anybody really. Maybe the government should step in, maybe they shouldn’t. Corporations should be paying it, but obviously, that’s not happening either. People have abandoned everything and moved before. People headed here from the 1600’s and never stopped, in the 1800’s they headed west. Owning property holds a certain amount of risk that people need to accept.
Herrera shopped around for a new plan, but he struggled to find a policy. Louisiana Citizens, the insurer of last resort for property owners in the state, was out of the question. It would have cost more than $7,000 annually. Herrera eventually found a policy with a small company in the state that charged him $4,930 annually — a 208% increase from what he paid in 2022.
There were at least 2 options $5000–$7000. Sell to someone at a discount with the understanding that buyer is willing and able to bear at least $5000 in annual insurance costs. Do this before its actually uninsurable.
Property is selling very high in the parish I’m from adjacent to orleans parish. People have forgotten about Katrina and have faith in the levee system. Property is also selling high in New orleans as well unless it’s a dog shit area.
It’s almost like the insurance industry is unsustainable in a world where catastrophe is the norm.
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The real answer is that people should be able to afford to fix their house, even after a disaster.
The fact that anyone in the bottom 90% probably cant shows how expensive it is to just LIVE in this capitalist nightmare.
Its unfathomable to most to be able to own a new car from just saving money while working at a shitty job for a few months, but it was ~60 years ago.
Also modern mortgages only came along because of the “brilliant” minds during the 1970s who invented MBS and started the contemporary downfall of American housing.
Inflation is the tool of the top 0.1%, and it works by squeezing the bottom 99.9% slowly and meticulously over decades.
I agree with you in the notion that insurance is a scam, but seeing how US government is swayed by special interests, 0.1%ers and conglomerate corporations, I’m sure it would be a money hole like the military budget.
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Exactly. It won’t be long before there will be very few places where insuring homes that aren’t at risk of weather disasters due to climate change will be possible.
We need a law that returns part of their premiums when a company takes them and runs off.
I know this isn’t logical in the broken system. But it rings true on a human level.
Hot take: all severe/extreme-risk flood zone properties should be immediately rezoned to disallow residential use. Current residents would be able to stay where they are, however any flood zone property put up for sale should be sold for either recreational or agricultural use, otherwise acquired by the government to be restored to a riparian ecosystem. Better to take the financial hit of property value decrease now and start dismantling high-risk development than realize the loss suddenly after the next big flood washes the entire neighborhood away. Additionally, creating more dedicated wetlands may even mitigate how far-reaching that next flood is and help protect properties that would have otherwise gotten inundated.
My take on this is that the root cause, like many other significant problems that we are seeing, is clearly wealth inequality. Yes, climate change is a big factor but, if the populace was readily able to afford replacement of homes impacted by natural (and human-augmented) disasters, insurance would have no problem. With how expensive homes have become due to artificially-constrained supplies, insurance companies have become an absolute necessity to mitigate homeownership risks and, when they pay out, and up needing to fork over more cash.
Please don’t misconstrue this as support for the insurance industry. They are just necessary at this time for people to manage risks in areas that cost far more than they should (healthcare, transportation, homes, etc).
Good, this will get people to start moving away from being under water and from wildfire zones. This is the beginning of the necessary movement, if it has to begin this way, then so be it.
It fucking sucks that here in CA, the entire state is losing insurers despite the fact that a huge chunk of the population lives in coastal areas with no danger of wildfires.
Presumably state laws prohibit discrimination, so their only choice is to cover everywhere in the state or nowhere
None that I could find.
I honestly think the insurance companies are taking advantage of this to try to force changes to the California insurance regulation, which is quite strict regarding cost increases to consumers. It’s the only reason I could think of that they would pull out of the entire state and not just the dangerous areas. It’s 2024, the data exists to an excruciating level.
I’ve concluded this as well.
Insurance is a slush fund which earns interest in between taking in premiums and paying out claims. If you mandate that they lose money the whole game pretty obviously collapses and the losses are unlimited.
Any industry that is mandatory for some vital facet of life cannot be left to the whims of the market. It should be highly regulated, and preferably state run.
Price controls are needed to prevent the naked greedy price fixing we see in many other industries.
Price controls can cause all capital to exit the market. If the state picks up the tab and sets an unreasonably low rate the state may eventually go bankrupt and crease to be able to borrow
Depends. Monopolies with price controls work well for some industries, like utilities. I do agree that everything should be done to encourage a private market with competition, within reason, but regulation needs to be strong.
I would have thought California EQ was the peril scaring them all away. Very expensive to reinsure - most commercial property catasrophy models (RMS & AIR are the big ones) peg it as the second most risky North American peril after Florida Hurricane.
Then those models are fucking shit. San Francisco and Los Angeles are in no danger from wildfire.
EQ is earthquake. According to USGS, California faces a ~75% chance of a major earthquake in the next 100 years.
Have a quick google of “California quake risk” for a slew of in-depth (and somewhat scary) articles and research papers.
Home insurance already doesn’t cover earthquakes though. That’s a separate insurance product, and companies could just stop offering it.
These folks are losing their insurance. But even those of us who live in safe areas with little to no history or indicators of disaster are still seeing rates skyrocket. Mine were raised 30% this year and I have no risk of flooding or wildfire, and very low risk of storm or earthquake damage. Crime in my neighborhood is the lowest in the region (kind of surprising considering it’s very working class mixed with lots of low income housing), and has no history of damage to the property at all. But still, 30% hike with no reason given. My car insurance jumped 25% too.
Start an insurance company.
I feel like the right half of neoliberals love insurance. Such a great component of capitalism.
So this should be their signal to start buying into climate change. Right?
There’s a simple solution here…take away these comp abilities to offer car insurance… it’s not as if their profits are non existent.
N a t i o n a l i z e
I cannot think of something I want nationalized less than home insurance. Climate change means that some areas are actually much riskier than they were before and the truth is some portion of households are going to become uninsurable and others are going to become expensive. Option 1: The expense of insurance and risk can be priced into the property at time of sale to a buyer willing to bear the cost. Option 2: If we are going to give free money to these people when their house is destroyed with government subsidized insurance to cover disasters it should be on condition of condemning uninsurable properties not rebuilding them multiple times.
counterpoint: similar to how nationalizing health insurance has lead states around the world to take safety and health seriously as a cost saving measure, nationalizing home insurance would lead to climate change being taken seriously as a cost saving measure.
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Actually every “goon” in this thread is giving practical advice to a real problem while you are over here preaching nonsense from a soapbox
Even if you somehow get insurance companies to pay people they don’t even want to insure it’s a temporary solution at best. Also it doesn’t solve the problem of climate change at all so these families are still in harm’s way.
Instead of getting angry at commenters for no reason and essentially calling for anarchy maybe you should join the “goons”
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If the price is inflated someone ought to start an insurance company to cover those folks for less and arbitage themselves into vast riches for all these underserved folks. More likely the prices reflect reality and they should pay them.
I don’t know what’s going on the home owners side, but almost half of that is the highest flood insurance rate possible. (So a super high risk area) the flood rates are managed and get capped out. It’s what enrages anyone around an inland plane. My 1 every 100 year flood coverage for an overflow brook costs 75% the rate of a coastal home that’s likely to end up entirely in the ocean in the next decade.
We need sanctuary cities to be built to anticipate massive human climate migration.
Megacity One here we come!
You can’t live in an area where your house is destroyed every other year and expect someone to pay for it.
Oh come on. No place is like that. I live in Florida, in the gulf coast, in a house from the 1940s. The house I moved from is 100 years old this year and still fine. Home insurance has been running a scam here for years, taking money and running. Of course the risk is higher but flood insurance is like 800 a year, house insurance exclusive of flood wants like 10x that, and they are cherry picking houses and leaving those they think are risky to be insured by the state insurance collective.
If I had all the money I’d sent to insurers over the years only to have them drop all the policies and disappear I could self insure at a higher amount that might actually pay to rebuild the house.
With any insurance, it’s like gambling, the house always wins.
Yet.
Right, but a 1/100 year event is not “every other year”.
You must not live in a hurricane area.
Can’t have a sub-market if a majority of multiple generations are forced out of the market it feeds off of.
