Weather Problems Lead to Higher Insurance Rates for 2012

If your state was hit with a serious weather catastrophe in 2011, be prepared to pay the piper in 2012. According to a study released by the Consumer Federation of America, homeowners in the 11 hardest-hit-weather states could be paying an additional $100 for every $500 worth of coverage on their homes. Those states – Alabama, Arizona, Colorado, Georgia, Kansas, Kentucky, Maine, South Caroline, South Dakota, Tennessee, and Virginia – will face serious homeowners insurance rate hikes as insurance companies attempt to avoid risk and remain profitable in the wake of a “record year for major disasters”.

Insurance companies are explaining the hikes by crediting climate change for the recent spate of weather disasters. In a recent press conference, insurers joined senators from Vermont and Rhode Island, both of which felt the impact of Tropical Storm Irene in 2011, to urge people to “take action now to minimize the damage that carbon pollution is causing to our country and our world”. Whether you blame climate change or not – and, for that matter, whether you believe climate change is man-made or not – the $44 billion in losses that property and casualty insurers experienced last year is indisputable, and insurance companies are working to make sure it does not happen again.

Many advocacy groups like CFA are complaining that insurance is a risky business and that insurance companies should not hike rates in the wake of 2011’s record weather disasters because they “place an unwarranted financial burden on homeowners,” and argue that insurance companies should be “calculated risk-takers” instead of “risk-avoiders.” Do you agree or disagree?

*God Speed*
TLD Investments LLC


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