Home Insurance How climate change impacts homeowners insurance in Philly region

How climate change impacts homeowners insurance in Philly region

by Cedric Guzman

Title: The Rising Threat of Localized Storms: How the Insurance Industry and Homeowners Are Coping


While hurricanes and tropical storms often dominate the headlines due to their large-scale devastation, smaller but increasingly frequent localized storms are wreaking havoc and causing significant damage in their wake. Recent events have raised concerns about the insurance industry’s response to climate change and how homeowners should navigate the evolving risks. This article explores the impact of localized storms, the insurance industry’s approach, and what homeowners in Delaware, Pennsylvania, and New Jersey can expect.

The Increasing Severity of Localized Storms

Local officials, such as Delaware County Council Chair Monica Taylor, have observed a rise in the number and severity of storms that, a decade or two ago, would have been dismissed as mere thunderstorms. These observations align with researchers’ and insurers’ findings, who are closely monitoring climate data to assess new risks.

Insurance Industry’s Response to Climate Change

Insurance companies play a crucial role in analyzing risks and adjusting coverage accordingly. As these companies seek profitable opportunities, they may raise premiums, cut coverage, or even withdraw from certain markets altogether. Recent decisions by insurers in Florida and California to cease providing homeowners coverage in those states raise concerns about the industry’s response to climate change.

Insurance Modeling and Assessment of Localized Risks

Insurers employ sophisticated tools, such as satellite data, to assess localized risks. While storms with high winds and heavy rains may not cause widespread damage like hurricanes, they can accumulate and result in an increase in insurance claims. Yulia Gel, a statistician at the University of Texas, points to an increase in wind and water damage claims in the Northeast.

Unique Factors in Florida and California

Although Florida and California face unique factors and regulations that affect their insurance markets, experts still advise homeowners in other states to pay attention to industry trends. Insurance companies are among the first to take action in response to climate risks due to their mobility and the substantial financial stakes involved.

Localized Wind and Fire Damage

Climate change is causing localized wind and fire damage, even in regions not typically associated with these risks. First Street, a nonprofit that provides climate risk information, estimates that over 5,000 homes in South Jersey and Delaware are at risk for wind damage without adequate insurance coverage. Additionally, parts of South Jersey are also experiencing a growing risk of wildfires.

Insurance Implications for Delaware Valley Homeowners

While Delaware, Pennsylvania, and New Jersey have strong and robust insurance markets, homeowners can still expect changes such as increased rates, modified deductibles, or alterations in policy structures. The Society of Actuaries Research Institute highlights that extreme weather events, including flooding, are increasingly factored into insurance calculations. However, it is crucial to note that flooding is typically not covered by standard homeowners insurance policies.

The Importance of Flood Insurance

Only those living in designated FEMA floodplains are required to have flood insurance. However, with the rise in inland flood catastrophes, homeowners residing outside these zones should seriously consider obtaining flood insurance to supplement their regular policies. Despite the growing risk, only 4% of homeowners across the nation carry flood insurance.

Local Weather Damage on the Rise

Apart from flooding, high winds, fallen trees, and other extreme weather damage are becoming more frequent. Medium-sized events occurring multiple times a year can aggregate and lead to higher overall losses compared to severe events happening infrequently.


Localized storms are increasingly posing a threat to homeowners, and insurance companies are recalibrating their strategies in response to climate change. Homeowners in Delaware, Pennsylvania, and New Jersey should remain vigilant about insurance coverage, especially with regard to flooding, and be prepared for adjustments in rates and policy terms. As climate risks continue to evolve, it is essential to keep track of insurance industry trends and take appropriate steps to protect homes and assets against potential damage.

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