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It is an astounding figure: According to the Insurance Information Institute, 12% of American homeowners today are without insurance coverage.

It’s no real secret why so many homeowners are going “naked.” The cost of coverage has escalated sharply in recent years. While mortgage lenders generally require borrowers to have coverage, the roughly 40% of Americans who own their homes outright might regard insurance as optional — and saying “no thanks” may feel like the necessary response when the premium triples in a year, as happened to a California homeowner cited in a recent USA Today article.

It is, obviously, a risky choice. The reality is that insurance premiums are rising so sharply — in excess of 11% last year nationally, according to S&P Global Market Intelligence — because payouts for damage are also escalating. And homeowners who can’t afford insurance premiums probably can’t afford to pay out-of-pocket for significant storm damage either.

Storms are not necessarily more common with the warmer climate, but they are more severe. The wildfire season seems now to be year-round. And the cost of replacing and repairing buildings has escalated as well. The Insurance Information Institute says insurers last year paid $1.10 for every $1 in premium collected.

The top 10 growth states in the 2020 U.S. census are all susceptible to hurricanes. But the problem of increasingly extreme storms doing increasingly costly damage is not limited to the Gulf Coast, as Mankato-area residents learned last month.

The premium affordability issue is a crisis in Florida and California, two high-population states with particular exposure to natural disasters. Insurance providers are pulling out of those states altogether, and neither red-state Florida nor blue-state California has a solution, because there is no easy, obvious answer.

Property damage is rising sharply — that’s the problem. The cost of insuring against it has to rise accordingly — that’s the symptom. To the extent that government can affect that cycle, the focus should be on controlling the problem.

— Mankato Free Press, July 11