Climate change is emerging as a new challenge for the housing market and homeowners. As severe weather-related risks and incidents escalate, homeowners find themselves grappling with the continued reality of soaring costs associated with homebuying.

Yahoo Finance's Senior Columnist Rick Newman sheds light on the issue, offering insights into the escalating home insurance premiums across the nation.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Angel Smith

Video Transcript

America's homeowners facing a hefty price tag from climate costs and now the fallout from severe weather risks may be spreading in the US job finances, senior columnist, Rick Newman joins us now with more Rick.

Hey guys.

Yeah, I've been looking into what is happening with homeowners insurance, uh, premiums.

We know people have been getting walloped with uh huge increases in auto insurance costs and something similar is happening with, um, home insurance premiums now.

And I think part of the surprise here is we expect this to happen in coastal areas and places that are exposed to extreme weather, the type that's familiar to us, but this is happening all across the country for a couple of reasons.

Number one, weather is just getting more extreme and extreme weather is getting more frequent and that is happening everywhere.

So for example, in the upper midwest, uh they've had a lot of hailstorms in recent years that have caused a lot of damage.

So that is pushing prices up in states like Minnesota and Wisconsin.

And the second thing that's going on here is because um, big national insurers because they write insurance policies across a huge pool of buyers all across the country to some extent, they are offsetting, uh, super high cost in places where there are severe storms, think Florida, California wildfire, tornado alley, things like that.

Um, those are getting worse and they're getting more expensive.

So they're having to raise prices in some other areas just to offset those costs.

And if you think this is price gouging, not really because when you look at the, uh, the the profit ratios or loss ratios of insurance companies, uh they, they have been losing money on insurance policies in 17 different states during the last five years when you average it out.

Uh that's compared with just seven states where they were losing money.

Uh going back to uh the 2014 to 2018 time frame.

So, uh this is becoming a bigger problem for insurers and it doesn't matter if you believe in climate change or not, this is showing up on the bottom line of insurance companies.

Uh and they are either raising rates, reducing coverage or getting out of markets altogether and that's gonna affect many, many Americans.