A growing number of US homeowners are finding themselves stuck between rising climate risks and a shrinking pool of private insurance options, putting long-term real estate stability under pressure. In states prone to wildfires, hurricanes or other natural disasters, many properties no longer qualify for traditional coverage. As a result, more homeowners are turning to state-backed “insurers of last resort,” known as FAIR Plan schemes – but those safety nets are increasingly struggling under mounting claims and limited financial resilience.
Between 2020 and 2023, the number of homes covered by FAIR plans grew sharply – by roughly 46 percent in one large state alone. During the same period, dozens of private insurers withdrew from high-risk regions, unwilling to underwrite coverage that could result in heavy losses if disasters strike. This exodus has left FAIR plans carrying a disproportionately large share of disaster-prone homes, exposing them to what many believe to be a financial squeeze that threatens their long-term viability.
FAIR plan policies often offer only minimal coverage compared with private insurance, and in many states they exclude key risks – for example, flood damage is frequently omitted. This leaves homeowners exposed to substantial financial peril, even when insured. In some instances, those living in high-risk zones have difficulty finding any form of reliable coverage at all.
For the real-estate sector, the trend could bring serious consequences. Properties in high-risk areas may lose value if prospective buyers factor in difficulty obtaining insurance or the possibility of steep premiums. This erosion of risk-mitigation mechanisms may discourage investment and make financing more expensive – potentially cooling demand for homes in vulnerable regions, increasing supply pressure elsewhere, and reshaping long-term property-market dynamics.
