Homeowners are outraged after a major insurance company announced it will not be renewing nearly 1,300 policies – here's what you need to know

For many Oklahoma homeowners, November means the need to find new insurance coverage at a time when it seems many options are either too expensive, inadequate or simply non-existent.

What happens?

The reason for their predicament is that Farmers Insurance has decided not to renew certain policies due to the wildfire threat, Newsweek reported. There are currently around 1,300 homeowners looking for new insurance as their policies expire in November.

“As real estate prices have risen, and with them the cost of replacing them, insurance prices to cover potential damage have also risen,” Newsweek quoted Alex Beene, a professor of financial literacy at the University of Tennessee at Martin, as saying.

“And when you combine these increased costs with a home in an area most likely to experience a natural disaster, insurance providers are forced to raise premiums to unimaginable levels or drop coverage altogether.”

Why is this pattern concerning?

While Farmers is choosing not to extend its selected policies due to the risk of wildfires, other states are seeing the same issue regarding the risk of hurricanes, floods, tornadoes or other extreme weather-related events.

Unfortunately, scientists have found that these events are expected to become more intense as a direct result of our warming climate. And if temperatures don't fall soon, wildfires and storms will continue to increase in severity.

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For homeowners, losing coverage may mean having to purchase more expensive insurance; In some cases, when such policies are not available or affordable, this may mean having to move cities or even states.

“Not only are they living in a property that is uninsured in the event of a loss, but the likelihood of them being able to move and sell that property drops significantly due to the same circumstances,” Beene told Newsweek.

What is being done to protect homeowners?

Ideally, smaller insurance carriers in a market like Oklahoma's could “come in and pick up the pieces” left by such a decision, Newsweek explained. But as network providers fear rising costs, many homeowners will instead face rising premiums or be forced to use subpar providers.

Some states offer a state-administered plan, but it is essentially a “last resort” arrangement and is not currently structured to cover thousands of homeowners per state.

While the responsibility for reducing greenhouse gas emissions falls to governments and businesses, many communities are looking for ways to mitigate the effects of natural disasters to protect their homes, from establishing fire protection zones to installing emergency flood pumps.

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