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As I mentioned in my last blog post, I am trying to “climate proof” my house – a) identify the risk the changing climate poses for my house and b) how to minimize the risk

So I think a good starting point is insurance because it’s a crucial component in home ownership for most people (besides the ultra-wealthy).

It’s crucial for two reasons – it allows home owners to manage the financial risk of home ownership and is a prerequisite for home ownership to be financially viable.

Without insurance, home owners are exposed to financial catastrophic risks such as the house burning down or being flooded.  Furthermore, the marketability of the house drops significantly if insurance polices are unavailable as people cannot qualify for mortgages to buy that (insurance is required to receive a mortgage).

So a homeowner’s objective is pretty simple – ensure that house has adequate coverage against any major risks for the length of ownership plus a couple of decades.  After all, if insurance will be unavailable shortly after you intend to sell the house, not many people will be interested in buying the house.

Climate change complicates this objective – as the climate change makes the environment more extreme, erratic in changes

• less stable environment means cost and availability of insurance more likely to vary – it’s less likely that insurance companies will offer insurance like they historically did as the future climate may be quite different
• more extreme climate and weather means more risk and higher insurance costs
• changing environment means new types of risks (i.e. flooding) and therefore new coverage

So, in the face of climate change, how do you make sure you have the necessary coverage and it will remain affordable and available over the life of your ownership and a significant period after (sometimes 30 years+)?

Ideally, I have 100% accurate projections for next 50 years outline how the environment around my house will change and can therefore identify the threats.

Sadly, in reality, I realized nobody can give me 100% certain predictions for 50 years (let alone 1 year).  If the insurance companies’ army of actuaries and statisticians can’t do it, I am certainly not going to be able to do it.

But I found that with a bit of research, I can get a clearer picture of insurance availability for my house in the future.

The first step is working with professionals – my real estate agent and insurance broker – to get the information I need.

Next: Insurance and Climate Change – How can a Real Estate Brokerage/Salesperson Help?

Previous: Climate Change and My Home