Suze Orman, the well-known financial advisor, is taking a strong stand against the exorbitant costs of home insurance. At 72, she is questioning the justification of the staggering $28,000 annual premium for her 2,100-square-foot condo situated in Florida. Orman, whose financial wisdom has guided countless individuals, expressed her disbelief over this figure, stating, “$28,000 for a condo of that size? This is outrageous!”
For Orman, the means to self-insure affords her the luxury of avoiding such costs. However, she is deeply concerned that many American families do not share the same financial flexibility. The relentless rise in insurance prices is not just a personal issue for her; it poses a significant challenge to homeownership across the country.
In her recent interview with DailyMail.com, Orman shed light on the broader implications of climate change, which she argues is influencing the skyrocketing insurance rates we see today. “Climate change is more than an environmental crisis; it’s a financial one, too,” she remarked. The frequency of devastating natural disasters, like hurricanes and wildfires, has notably escalated in regions that previously experienced minimal risk. This shift has ultimately resulted in substantial financial repercussions for homeowners.
Last year alone, the National Oceanic and Atmospheric Administration (NOAA) listed a staggering 28 billion-dollar natural disasters across the United States, leading to a radical uptick in insurance costs. As reported by the National Association of Realtors, the average homeowner now pays around $2,377 annually for insurance—a figure expected to rise by an additional 6% by year’s end.
For Floridians, the situation is even more challenging, with the average insurance premium set to reach approximately $11,700 in 2024. In Louisiana, homeowners face projected premiums nearing $8,000. Betsy Stella, a vice president at Insurify, cautioned that high-risk areas might soon become uninsurable, leaving many without adequate coverage options.
These mounting insurance prices pose a significant obstacle for potential homebuyers. Orman emphasizes that with each hike in insurance rates, the dream of homeownership moves further out of reach for many families. “I never thought I’d have to advise buyers to brace for skyrocketing property insurance in the future,” she stated, highlighting the unpredictability of real estate investments today.
It’s important to note that homeowners are often required to carry insurance if financing through a mortgage, a rule that brings further complications for those unable to shoulder hefty premiums. Orman, on the other hand, has opted to forgo the expensive coverage, choosing instead to save her money. “I refuse to pay $28,000 a year for insurance if the insurer is likely to challenge any claim I submit,” she declared with conviction.
The increasing frequency of extreme weather events is forcing insurance companies to either raise premiums substantially or exit certain markets altogether. Allstate, for instance, has announced a shocking 34% rate increase for homeowners in California, effective this November, while State Farm raised rates by 30% earlier this year.
In conclusion, Orman’s stance is clear: the combination of climate change, escalating repair costs, and a strained insurance industry are transforming the landscape of homeownership in America. For those who have the financial means to sidestep the insurance difficulties, the issue may seem distant. However, for many Americans, these challenges highlight the complexity and increasing costs associated with achieving the traditional dream of owning a home. As Orman poignantly observes, if insurance rates continue to climb at this pace, the road to homeownership may become a far more complex and costly endeavor for many.