The estimated property loss from California’s wildfires will probably top $20 billion. Insurance companies like State Farm have already dumped homeowner policies in New Jersey. And the industry is taking evasive maneuvers nationwide, including in New Jersey.
It’s a volatile marketplace for homeowners insurance, said environmental advocate Doug O’Malley.
“Really, a game of Jenga, where one extreme weather event could potentially topple the entire market in a region,” said O’Malley. “So, you know, when we talk about where we are here in New Jersey, we are not immune to what’s happening in California. And honestly, a big reason why we’re seeing home insurance rates increase in New Jersey is because of the increase of climate disasters across the entire country.”
Added Clinton Andrews, director of the Center for Urban Policy Research at Rutgers University: “I have a house on the Shore and I was told, sorry we are dropping you from one insurance company. But in the same letter, they said luckily we found another company who wants to take over your policy.”
A recent study shows three New Jersey counties — Cape May, Atlantic and Hudson — are in the top 100 nationwide for the biggest jump in non-renewal rates by insurance companies, measuring between 2018 and 2023.
“Typically the pattern is, first they raise prices,” Andrews said. “When they can’t raise prices anymore, or because it’s a regulated price … then they’ll exit from a market.”
California is a warning bell, Andrews said: “Their insurance market is about to be broken. And there’s just too much for the private companies to handle in terms of the risk.”