The Consequences of Climate Change: Why Property Insurance is More Important Now Than Ever

In 2015, worried about the impact of climate change, representatives from governments around the world convened in Paris, France. They committed to do everything that they can to reduce emissions of greenhouse gases into the atmosphere and limit the warming of the planet to below 2 degrees Celsius. This became the Paris Agreement, a landmark multilateral process that addresses the threat of climate change.

Since then, many nations have made significant changes that improve their emissions.

The European Union expects to reduce its emissions by 40 percent by 2030. So far, the region has made massive investments in switching to renewable energy.

But, Morocco and The Gambia are only the two countries that are on track to reduce emissions to levels consistent in below 1.5-degrees-Celsius global warming. Morocco has a goal of generating 52 percent of its electricity from renewables by 2030. The Gambia is constructing one of the largest photovoltaic plants in West Africa. The project aims to restore 10,000 hectares of forests, savannas, and mangroves.

Whether the world will actually see the goal achieved is yet to be seen. Right now, the United Nations published a report saying that parties involved are not on track to meet the target.

Unless every country can reduce emissions, the impacts of climate change will worsen. Billions of people will suffer from natural disasters never experienced before. There will be flooding, frequent and more intense hurricanes, droughts, wildfires, and so many other calamities.

As a result, it will lead to serious property damage.

Climate Change Will Tank Real Estate

climate change

The natural disasters caused by climate change will cost a lot of money in the future. These events will lead to the destruction of property around the world, including in the U.S.

In 2017, the nation went through a historic year. Within those 12 months, the country was battered by eight severe storms, three tropical cyclones, two inland floods, a crop freeze, drought, and wildfire. Each of these events caused over a billion dollars in damages, mostly to commercial and residential real estate.

These events are proof that climate change is real, and its consequences are already felt now. As early as now, real estate firms and investors are calculating the magnitude of the impact of climate change on the industry, so they can be better prepared. Those who adopt safeguard before natural disaster strikes will likely outperform those who did not.

Estimates reveal that, by 2100, real estate losses will reach $360 billion per year.

The shifting weather patterns will, in addition, impact the resale value of properties in areas most at risk of natural disasters. Neighborhoods, where flooding, wildfires, and other catastrophic events may happen regularly, will be less desirable to buyers.

Seeking Protection from Future Disasters

Needless to say, climate change will have a significant financial impact on everyone. One disaster can bankrupt not just small businesses, but people, too. They can lose their homes and all of their belongings from a wildfire or a hurricane.

Homeowners should look into getting a replacement cost estimate of their property and start shopping for insurance. They should take into consideration the future impact of climate change to their present location, identifying the risks so that they could be taken into account.

Insurance can save a homeowner from future financial ruin. It not only reimburses the cost of the structure, but it may also pay for other belongings, including electronics and furniture damaged or lost from the natural disaster.

But, choosing the right insurance is integral. A basic homeowners insurance might not cover damages from certain events, including floodings. The rising sea levels will make floodings a regular occurrence in many places, especially in coastal areas.

Some people also refuse or drop their insurance if they are not required to have it. While the insurance is an additional expense now, it will be crucial in the future. No one can predict when a natural disaster will devastate a location, but it is possible. Because of climate change, it is likely that many families across the country will see their real estate properties destroyed by nature.

A house is a valuable asset, one that many people put their life savings into. It should be protected against any type of damage or destruction. Unless climate change is addressed and mitigated by all nations around the world, weather conditions will continue to see major changes. The warming global temperature will bring more extreme weather events that will leave behind billions of dollars worth of loss. People should be prepared for what is coming.