There’s a direct line between rising insurance costs and the foreclosure numbers we’re seeing, and it’s worth understanding because it tells you where work is heading.
Here’s how the connection works. A homeowner’s mortgage payment typically includes principal, interest, taxes, and insurance — the PITI payment. When insurance premiums spike — and in some markets they’ve doubled or tripled in the past two years — the total monthly payment jumps significantly. A homeowner who was making their payment just fine at $1,800 a month is suddenly looking at $2,400 or $2,600, and that increase happened with no change in their income.
First Street, a risk research firm, has projected that for every 1% increase in insurance costs, there’s a corresponding increase in foreclosure rates. They’ve modeled that foreclosures nationwide could rise significantly over the next decade as climate-related insurance costs continue to climb.
Florida is the poster child for this dynamic. The state’s property insurance market has been in turmoil — major carriers have pulled out, Citizens (the state-backed insurer) has ballooned, and premiums have skyrocketed. But it’s not just Florida. Louisiana, California, Texas, and other disaster-prone states are seeing the same pressure.
For property preservation vendors, this connection matters because it helps you predict where volume is heading. Markets with the steepest insurance increases are going to produce more foreclosure starts 12 to 24 months down the line. If you’re watching insurance news in your state, you’re getting an early indicator of where preservation work will grow.
The other angle is that properties in high-insurance-cost areas tend to be in disaster-vulnerable locations. That means the preservation work on these properties often includes storm-related damage mitigation — tarping, board-ups, debris from wind damage — on top of the standard preservation scope.
Keep an eye on insurance market developments in your coverage area. When carriers announce rate increases or market exits, that’s a leading indicator that your work order volume will follow.