Lake Tahoe walking path in Incline Village, Nevada, where homeowners are facing an insurance crisis.

Lake Tahoe’s Nevada Shore Faces California-Like Insurance Crisis

Homeowners on both sides of Lake Tahoe now face the same realities when insuring their property. Getting coverage is a major challenge.

What’s new: Increasing numbers of homeowners on the Nevada shoreline are receiving non-renewal notices, something the California side of Tahoe has faced for several years.

“It has definitely crossed the state line,” Denise Bremer, head of the Incline Village Association of Realtors, told the San Francisco Chronicle. “I sell on both sides and it started in California a few years ago, but in the past year we’ve seen it creep over to the Nevada side.”

Homeowners’ quandary: Between non-renewals and substantial premium hikes, current homeowners and potential buyers are stuck. Without insurance, they’re unable to get or keep home loans, which affects the housing market. Some property values are declining as insurance risk impacts the pricing structure.

The big picture: Where it used to be easy, homeowners across the U.S. are struggling to obtain insurance. Insurers are pulling back, or out, of certain markets in an effort to rebalance their risk exposure.

Hurricane-prone states like Florida, Louisiana, and parts of Texas have been hit hard too.

Zoom in: Mark Friedlander, a spokesperson for the Insurance Information Institute, named five factors causing the homeowners’ insurance problems:

  1. People hiring attorneys who are quick to sue;
  2. Inflation is driving up home reconstruction costs;
  3. More people are living in areas susceptible to natural disasters such as wildfires, hurricanes, and tornadoes;
  4. Many states have a “challenging” regulatory environment;
  5. And insurance companies are concerned about risk exposure.

What’s next: In Nevada, regulators are consulting neighboring states to explore solutions like a FAIR plan.

FAIR insurance is a last-resort policy designed for homeowners in high-risk areas unable to get coverage from a standard provider. FAIR Plan policies usually cost more and provide less coverage than a standard home policy.

What we’re watching: The home insurance affordability and availability crisis will likely continue in the near term. Industry professionals caution other states in the West to prepare for similar challenges.