Hurricane Helene caused massive devastation to properties and buildings as it ripped through the Sunshine State. Unfortunately, the devastation caused by this storm hit the state after years of skyrocketing prices for both homes and flood insurance which has left households without insurance coverage or low-cost policies that offer less coverage. 

The increasing cost of insurance in the state is due to more frequent and severe storms as well as the cost of building materials shooting up. Homeowners will most likely see their insurance costs rise again as the total amount of damage done by Helene comes into focus.

“There’s no question that the burden on households’ budgets has increased in recent years,” Benjamin Keys, a professor of real estate at the University of Pennsylvania’s Wharton School, said in a recent ABC News article. “It has gotten substantially more expensive to live in harm’s way.”

Helene made landfall in the Big Bend region of Florida as a Category 4 hurricane, which is the strongest hurricane to ever make landfall in Big Bend. According to news reports, at least 220 people have been killed by Helene with that number expected to rise. 

Helene dropped over 30 inches of rain on North Carolina which resulted in the biggest local flooding in the history of the state. Helene left a path of devastation that stretched for 600 miles. 

Homeowners will now have to file claims on their homeowner policies that have dramatically risen in price over the last few years and claims tend to drive premiums even higher. 

The cost of homeowners insurance rose roughly 11% in 2023 which is three times the rate of inflation according to S&P Global. Florida residents have seen premium increases that are even higher, in the Sunshine State, the average home insurance premium rose a shocking 43% from January 2018 to December 2023 according to S&P Global. 

As premium costs head up, homeowners are more likely to turn to insurance policies that offer less coverage or have massive deductibles attached to them. “With the costs going up, people are getting less insurance and that’s going to be a problem when a disaster like this hits,” said Shan Ge, a professor at New York University who studies insurance and climate change, in the recent ABC News story. “The recovery will be slower, and the financial effects will be bigger.”

Some homeowner polices currently separate out hurricane coverage with an additional deductible which is often a percentage of your total homeowner coverage. This deductible kicks in when the damage done to your home is caused by a hurricane. As an example, if you have a 2% hurricane deductible and are carrying $300,000 in total coverage, you will have to fork up $6,000 as your deductible. 

What is important to remember when it comes to hurricanes is that a standard homeowners policy excludes flood damage so unless you are carrying a separate flood insurance policy, any damage caused by flooding will not be covered. 

Many homeowners in Florida are not covered by flood insurance and that could be a major issue as homeowners try to repair or rebuild their homes. 

“With an event like Helene where we are seeing all of the water, there’s likely to be more uninsured losses happening due to water because you don’t have as much take up there as you would on the hurricane policy side of things,” said Jeff Waters, an analyst at Moody’s Analytics subsidiary RMS, in the ABC News article.

While the cost of homeowners insurance has skyrocketed in recent years, so has the cost of flood insurance as the National Flood Insurance Program puts in place “Risk Rating 2.0” which uses local data to set a premium, which will most likely raise prices in many areas further squeezing homeowners. 

“It’s pretty clear in the aftermath of these disasters that homeowners insurance premiums rise a lot,” said Ishita Sen, a professor of finance at Harvard Business School who studies home insurance rates, in the ABC News article.

The rising cost of insurance could force homeowners to make difficult choices when it comes to homeowners coverage. 

“This higher cost of living in disaster-prone areas is hitting households’ pocketbooks in ways that we haven’t seen,” Keys said in the ABC News article. “Eventually it’ll induce substantial changes in these communities, whether that’s deciding where to live or how to build.”