This Week’s Unholy Mix of Drought, Wind, and Fire in Southern California: A Warning of an Accelerating Insurance Crisis in Climate-Risk Areas?

In the not-too-distant future, certain areas will effectively be red-lined from a flood or fire insurance perspective, either formally or by having policies be so expensive as to be unaffordable, or having terms that limit coverage in the event of wildfire or flood losses? What happens to those properties when the only market is cash-only buyers (or much smaller mortgages, limited to the maximum that insurers will cover), and then ones who understand that they are at risk of bearing the full or large losses?

And consider: what happens to current home borrowers if they can’t meet the obligations in their mortgage to maintain adequate home insurance?