How Climate Change Affects Your Home Insurance Policy

When you hear the term "climate change" you don't usually think it has anything to do with your home insurance policy. Yet, as the natural disasters of the past year such as tornadoes, floods and hurricanes demonstrate, it most definitely does. Climate change is affecting the incidences of natural disasters that become federally declared disasters. In the 1990s, an average of 46 federal disasters were declared annually; in the 2000s, the number rose by 10; last year, there were 81; and in the first seven months of this year, there have been 46. Over the past three years, storms and tornado-related claims have reached record highs, and for this year, experts predict that such claims will reach even larger numbers. The more and the higher the claims, the higher the premium a homeowner pays on his home insurance policy.

Buying Homeowners Insurance

So what does all of this mean for consumers buying homeowners insurance? Simply put, they need to know what types of damages are covered and what the limitations of their coverage are so they're prepared in the event of a disaster. Simply complying with a lender's demands often doesn't cover the full costs of replacing a home, as lenders usually require a home only to be insured for the amount of the mortgage. So it's to be advised to carefully research what the current repair and replacement costs of a home are before buying homeowners insurance, and to insure the home for that amount, rather than the amount of the mortgage.