Climate and insurance — the binding new constraint
Insurers cancelled nearly 2 million homeowner policies between 2018–2023 — over four times the normal rate. Florida average premiums are now ~4× the national average. State Farm, Allstate, Progressive have exited or restricted writing in CA, FL, LA, TX. Underwrite the next-decade premium, not today's.
Premium increases of 30–100% over five years are common for coastal multifamily, hospitality, and industrial assets. Insurance now represents 10–20% of OpEx for many Florida properties — up from 3–6% historically. The California Association of Realtors reported 13% of California realtors had at least one 2024 sale fall through due to insurance issues — nearly double the prior year.
California's FAIR Plan and Florida's Citizens Property Insurance are now de facto state insurers with concentration risk that, in a single bad season, could require state-level bailouts. A Cat-5 Florida hurricane with $150B+ insured losses could trigger Citizens insolvency and federal backstop pressure.
For individual buyers: get quotes from at least three carriers before signing. If only the state insurer of last resort will write the policy, that's an insurability problem, not a coverage problem. Model the next decade of premium at 6–10%/year increase in higher-risk markets — that's often the difference between cash flow and negative carry on a rental.