Suze Orman Decided To Drop Homeowners Insurance After An Outrageous Quote: '$28,000 For A 2,100-Square-Foot Condo. Are You Kidding Me?'

Finance expert Suze Orman has voiced concerns about the impact of climate change on property insurance costs, asserting it could threaten the American dream of homeownership. Orman, 72, faced a $28,000 annual insurance quote for her Florida oceanside condo, leading her to forego coverage entirely.

She highlights a troubling trend where soaring insurance costs driven by frequent and severe weather events may deter Americans from buying homes. 

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"Climate change is going to make a big difference in people's desire to own their own home," Orman told DailyMail.com. 

She pointed out that the increasing unpredictability in places like Southern California and areas newly prone to severe hurricanes amplifies homeowner anxiety, especially combined with high mortgage interest rates.

This sentiment is supported by data indicating a 23% increase in the national average home insurance cost within a year, now averaging $1,759. The rise in premiums follows a record year where the U.S. saw 28 natural disasters each causing over $1 billion in damages.

According to News-Press, Florida has the highest home insurance rates in the U.S., and they're predicted to rise further. In 2023, the average annual premium for Florida homeowners was $10,996. As of April, Insurify forecasts a 7% increase this year, bringing the average cost to $11,759.

Orman's frustration with insurance rates is palpable. Referring to her situation, she said, "$28,000 for a 2,100-square-foot condo. Are you kidding me?" 

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Her decision to "self-insure" reflects a growing trend among homeowners who own their properties outright and choose to risk not having coverage.

Although self-insuring is becoming more popular, it comes with considerable risk. In the event of a disaster, such as a fire or tornado, a homeowner without insurance would be responsible for all repair or rebuilding costs, which could be devastating. Anyone considering this route should have a strong financial safety net. 

The broader insurance market has responded to increased risks by hiking premiums and withdrawing from high-risk areas. For instance, State Farm Insurance ceased insuring homes in California because of wildfire risks, reflecting a trend of insurers recalibrating their risk exposure because of climate change.

Insurance issues are further complicated by practices like the "takeout" in Florida, where new companies cherry-pick lucrative policies, leaving less desirable ones behind. This system, described by insurance executive Bruce Lucas on the podcast "The Insurance Guys," showcases the evolving strategies to manage growing risks and opportunities in states like Florida.

As homeowners face escalating costs and insurers adjust strategies, the future of the American dream of homeownership appears uncertain. 

Considering these complexities and uncertainties, consulting a financial adviser can be particularly beneficial for homeowners. If you’re experiencing increased rates and are concerned about how these costs will impact your long-term financial plans, including retirement, an adviser can offer tailored strategies to maximize your resources. They can help assess your ability to self-insure or find viable alternatives to manage and afford coverage. Seeking professional financial advice ensures that your homeownership and retirement goals remain achievable. 

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