As climate change accelerates, hurricanes, wildfires and hailstorms are hitting the United States with increasing force, and insurance markets are struggling to cover the damage they leave behind for their customers.
Extreme weather will cost the United States in 2023 alone Over $92 billion. And home insurance companies aren’t the only ones raising premiums.
Now, as climate change becomes an increasingly prevalent and costly factor, auto insurance quotes reflect trends seen across the home insurance market.
Experts say this could be a problem for car owners. Vehicles are an important means of evacuation during disasters caused by climate change, but just like houses, they can also be subject to damage from floods and fires.
Primary and secondary hazards
when hurricane helen Cars drifted down streets like boats as the floodwaters that hit the southern United States in early October submerged entire neighborhoods. Other vehicles were crushed by fallen trees and flying debris.
Most auto insurance plans will cover floods and these external damages, allowing you to recoup some of your losses. The Palm Beach Post reported. Florida residents have filed more than 90,000 auto insurance claims since Hurricanes Helen and Milton.
The bad news is that the increasing intensity of hurricanes is prompting insurance companies to raise premiums in preparation for future payouts. Andrew Hoffman, a professor of sustainable enterprise at the University of Michigan, says it’s not just megastorms that are putting the auto insurance market at risk.
“We can talk about big storms like Helen and Milton, but really it’s the secondary perils that are causing you to pay more. And it’s the severe rain storms. [and] And with that comes flash flooding,” Hoffman told me. These hazards include hailstorms, droughts, and wildfires, all of which are caused by climate change.
“In fact, it is the secondary perils that are having a major impact on rising insurance costs,” he added.
Ann August report We found that the average U.S. auto insurance policy could jump 22% by the end of this year. There are various factors behind this, including inflation, abnormal weather, and an increase in serious accidents and dangerous driving. Rates in California, Missouri and Minnesota could rise by up to 50 percent, the report said, noting that “damage from severe storms and wildfires is contributing to the rate increases in each state.”
In 2023, insurance company Allstate threatened to suspend auto insurance renewals in several states until the government agreed to raise premiums. The Wall Street Journal reported. The problem is even worse in the home insurance market. In March, My colleague Amy Green writes: In Florida, homeowners are grappling with astronomical home insurance premiums as climate change disrupts real estate markets across the state. Florida is currently 3rd highest car insurance premium rate Similarly in Japan.
“A lot of the things that apply to weather effects on home insurance also apply to cars parked in your driveway,” Hoffman says.
Around the world, only a portion of the costs of natural disasters are covered by insurance companies. Last year, insurance and reinsurance companies paid out $95 billion of the $250 billion in economic losses. According to Munich Re.
Ripple market effects
After recent back-to-back hurricanes, rental car companies customers flooded I’m waiting for my car to be repaired. People with broken down cars turned to local dealers to find new vehicles, but some of these dealers were unable to avoid the storm’s path of destruction. For example, one dealership in New Port Richey, Florida lost an estimated 672 vehicles during Hurricane Helen. The shop’s cars were insured and the manufacturer sent new cars in response to demand, but the dealership owner said he still owed the money. Approximately $3.5 million to cover deductibles..
Demand and prices for new and used cars often increase after a hurricane. So are the risks of fraud, experts say. a recent reports Automotive data company Carfax estimates that as many as 138,000 vehicles were flooded in six states during and after Hurricane Helen. The company warned that thousands of these vehicles are likely to be purchased and cleaned by fraudulent salespeople who prey on customers who are unaware of lingering internal damage. similar scam Occurred in the aftermath of Hurricane Katrina In 2005.
“These scammers clean and transport cars across the country, then get high deals from unsuspecting buyers,” Faisal Hasan, vice president of data at Carfax, said in a statement. They will try to make you think that.” “These cars may look new in the showroom, but they are literally rotting from the inside out.”
Last week, Illinois Attorney General Kwame Raoul issued a warning Consumers are aware that these flood-damaged vehicles may soon enter the state’s used car market, as they are “often transported hundreds of miles from the storm-hit area.” I told him.
