Natural disasters are becoming more widespread and severe. Did you know that 2020 and 2021 were the worst years on record for the most natural disasters?
The prevalence and intensity of storms, wildfires, floods, tornadoes, and hurricanes not only threaten our safety, but can also cause significant damage to our homes, and especially our vacation homes. In fact, a recent analysis by Redfin real estate brokerage of housing records and ClimateCheck data uncovered that vacation homes are particularly vulnerable to natural disasters. Purchases of second homes with a high flood risk rose 45 percent between 2020 and 2021, and purchases of second homes with high storm risk rose 40 percent during that same period.
Common risks second-home buyers face
According to Redfin’s analysis, fire caused by extreme heat index and drought is the most common common risk facing second-home buyers with high-storm risks coming in as a close second. Nearly 94 percent of second homes purchased in the past two years face a high heat risk while high storm risks affect 78 percent. These common risks are of course driven by popular second-home destinations, such as Florida and Arizona, which both face high heat and/or storm risks.
Costs of natural disasters
As expected, average claims costs vary widely based on the type of natural disaster. In 2021, 20 weather-related disasters totaled more than $1 billion in damages each and $145 billion in total combined damages overall, making it the third costliest year in history for natural disasters. Similarly, 22 recorded billion-dollar weather events occurred in 2020. To date, Hurricane Katrina, which devastated the Louisiana, Mississippi and Alabama coasts back in 2005, is the most expensive natural disaster in U.S. history.
Unfortunately, the surge in costly climate events combined with rising costs to rebuild, labor shortages and “demand surges”’ after natural disasters have triggered higher homeowners insurance premiums, according to CNBC experts. However, without adequate homeowners insurance coverage, the costs of rebuilding and repairing damaged homes would be extremely burdensome to the homeowner. For instance, if a disaster hits and you have to rebuild or repair your home, you’re on the hook for any amount that’s over your homeowners insurance limit. Do you have enough homeowner’s insurance coverage to cover increased construction costs?
Be Protected for the Unexpected
Is your second home sufficiently covered? There’s no better time than the present to assess your risk and coverage on both your primary and second homes. Licensed in 48 of the 50 states, the personal lines department at Kemmons Wilson Insurance Group insures families in Memphis with properties elsewhere as well as families all over the country.
Contact an expert at Kemmons Wilson Insurance Group to review and discuss your insurance coverage. Whether we’re protecting your business, your employees or your loved ones, we provide you with personalized solutions to the problems you don’t see coming.