Home climate-proofing can lower your bills. Why people still Aren't doing it

A new study shows that homeowners aren’t motivated by insurance or tax incentives to protect their homes from extreme weather.

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Myles Ma, CPFCSenior ReporterMyles Ma, CPFC, is a certified personal finance counselor and former senior reporter at Policygenius, where he covered insurance and personal finance. His expertise has been featured in The Washington Post, PBS, CNBC, CBS News, USA Today, HuffPost, Salon, Inc. Magazine, MarketWatch, and elsewhere.

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All over the country, climate change is making it more expensive to own a home. In California, Florida, and other coastal states, many home insurance companies are raising premiums or dropping coverage altogether due to increasingly costly natural disasters and extreme weather events. 

There are several ways for homeowners to fortify their homes against extreme weather. If your home is in an area with high winds, for example, you could strengthen the connection between your roof, walls, and foundation, or you could install impact-resistant windows, doors, and roofing that are designed to withstand high winds and debris. Known as “home hardening”, these types of fortifications can also make your home both easier and less expensive to insure.

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But a study published in Climate Policy in May finds homeowners are only motivated to make these changes if they improve the value of their homes. Avoiding damage and lowering insurance costs aren’t strong enough motivators.

“The messaging we’ve been using about avoiding losses in the future — you do this today and in the future you shall be spared — it doesn’t work,” says Tracy Kijewski-Correa, a professor, director of the Pulte Institute for Global Development at the University of Notre Dame, and a co-author of the study.

About the study

Kijewski-Correa and her co-authors analyzed survey results from 662 coastal households in New Hanover County, North Carolina, located on the Atlantic coast. Here are some of the key findings:

  • A majority of homeowners believe damages from a future hurricane would be less than $50,000.

  • The average respondent has taken “no to minimal action” to adapt their home to hurricane risk after purchasing, including minor upgrades to protect their windows.

  • Homeowners who think adaptations will increase the market value of their homes were more likely to own homes with upgrades, and more likely to make upgrades after purchase.

  • While many people would consider upgrading their windows in response to tax or insurance discounts, they didn’t feel much urgency to do so. 

The findings are especially stark because of how frequently North Carolina experiences hurricanes. The state also promotes homeowners insurance discounts for homes with features that mitigate severe weather damage. 

“If these people aren’t doing anything, the prospects are probably lower elsewhere,” Kijewsky-Correa says.

These findings show that outside of when they buy their homes, homeowners receive little education about their property’s existing resiliency and which, if any, home hardening upgrades it needs. Instead, homeowners are often focused on aesthetic features like granite countertops, Kijewski-Correa says. She wants to reach a point where Zillow lists these resiliency features as well, which could add to the home’s listed value in the process.

Insurance incentives

Many home insurance companies offer discounts, in some cases after a wind mitigation inspection, for outfitting your home with protections like storm-proof roof shingles, hurricane-resistant windows, and wind-rated garage doors. But, as the study shows, these discounts aren’t compelling many people to make these upgrades. One reason is insurance companies may be reluctant to advertise these discounts, especially in states where their margins are already thin. Home insurance companies are already leaving or going out of business in some states.

Homeowners who participated in the study either weren’t aware of the credits or found it was difficult and time-consuming to get them, Kijewski-Correa says.

What will convince people to upgrade their homes?

Many homeowners are aware of the risk climate change poses to their homes: A Policygenius survey found nearly half of American homeowners expect their homes to be damaged by extreme weather related to climate change in the next 30 years. But the same survey found one in three homeowners either don’t have or aren’t sure if they have enough insurance to rebuild their homes in the event of extreme weather, and 80% of homeowners don’t have any flood insurance.

Kijewski-Correa envisions something like a LEED certification, which denotes sustainable construction standards, but for hurricane adaptations.

“You should feel proud of it and get some credit for that in the value of your home,” she says.

If homeowners act independently to prevent damage to their homes, it could bring insurance companies back to states they’ve left because of climate risks. Unfortunately, many people underestimate the risk they face. Many homes aren’t built to the latest building codes, and even updated standards are designed to protect life, not property.

While it would be politically difficult to legislate home climate-proofing requirements, if the market started rewarding these upgrades with higher home values, that could motivate more homeowners to take action, the study found. This approach has limitations, Kijewski-Correa says — it wouldn’t reach people who don’t plan to sell their homes. But this study shows that a more robust strategy beyond just the existing incentives could pay major dividends. 

Image: Steve Cicero / Getty