Even for Star Island, the most exclusive enclave in Miami, the bill is a shocker: $622,000.

That’s per year — for homeowners insurance.

Granted, that was a recent quote for a policy on one of the ultraluxe mansions on the Biscayne Bay island, where A-listers like Rick Ross, Ken Griffin and Alex Rodriguez own homes. But, only last year, the same policy cost $200,000.

So it goes across the nation in the rarefied playgrounds of the rich, where price — and, it seems, risks of climate change — are no object.

From Miami to Aspen to Napa to Maui, home insurance is reshaping who can live where, and at what cost.

Even before Hurricane Idalia hit Florida’s Gulf Coast last week, leaving a trail of destruction in its wake, tens of thousands of ordinary Floridians were struggling to find affordable policies.

In the past three years alone, rates in the Sunshine State have tripled. Farmers Insurance recently joined more than a dozen insurance companies that have stopped writing home policies in the state, concluding that the risks are simply too great. Others have abandoned California. After the deadly wildfires on Maui, some worry the same might happen in Hawaii.

For the billionaires and mere multimillionaires who have flocked to places like South Florida, a five- and six-figure policy, while costly, won’t break the bank. Still, an increasing number of well-heeled residents are opting to forgo hurricane insurance, risks be damned.

The result: an acceleration of what’s come to be known as climate gentrification. Increasingly, only the affluent will be able to afford to insure themselves against the extreme weather, floods and wildfires on our warming planet. People of more modest means will simply be priced out, industry experts say.

“Only wealthy Americans are going to be able to afford to buy homes in some of these coastal communities,” said Mark Friedlander, a director at the Insurance Information Institute.

But even for the moderately wealthy, insurance costs are beginning to verge on unaffordable: The cost of so-called high-value insurance, loosely defined as policies covering homes worth more than $1 million, is outpacing the rise in premiums for more modestly valued homes by anywhere from two to 70-fold.

“I’ve done this 32 years and I’ve never seen rates rise the way it’s happening today,” said Cindy Zobian, managing director at insurance broker Alliant Private Client. “If you’re getting a rate increase under 20% it’s almost a gift.”

Increases of up to 800% are closer to the norm, she said, and it’s not uncommon for those triple-digit rate hikes to be accompanied by lowered coverage limits.

A home in Florida that was insured for $60 million, excluding contents, with full wind coverage carried a premium of about $600,000 last year. This year the insurer dropped wind coverage. After negotiating and finding a separate carrier for a wind policy, the homeowner wound up agreeing to pay $750,000 in premiums for $50 million less coverage. “That was a considered a win,” said Zobian.

In Florida, the problem boils down to this: Too many people have moved into areas that might be at danger from rising sea levels and more frequent and intense tropical storms.

The mansion on Star Island is but one example. A couple of months ago, the owner of the $50 million spread was looking for a new carrier and was flabbergasted at the $622,000-per-year-quote.

“He ended up not getting hurricane insurance, only flood,” said Michael Melamud at the Gables Insurance Agency, who brokered the transaction. “The house is built like a bunker, and he’s willing to bet it can withstand a hurricane.”

Another client, a doctor, recently got a $60,000 home-insurance bill. That was up 62% from the previous year. Rather than swallow the cost, the man paid off his mortgage to get a cheaper, pared-down policy, Melamud said.

Melamud, who’s worked as an insurance broker in Florida for over two decades, says he’s never seen prices go up so much, so fast. The hardest hit are the ordinarily wealthy: The doctor or lawyer with a mortgage.

One New York transplant, Chris Rim, recently bought a one-story 1950s-era house on one of the man-made islands in Miami Beach, where prices range from $5.5 million to $40 million.

His latest home-insurance bill: $98,000.

“It was a total shock,” says Rim, founder of Command Education, a high-end college-admissions consulting firm.

Most Floridians don’t pay anywhere near that much for homeowners insurance. The average premium is $6,000, according to the Insurance Information Institute. Still, that’s up 42% this year alone — and more than three times the average rate nationally.

Yet more people keep coming to the state, drawn by home prices and taxes that are lower than in many other parts of the country.

“People don’t seem to be scared off by climate risk factors,” Friedlander said.

Today, nearly 15% of all the homes in Florida are uninsured, almost double the national average. Self-insuring, as it’s known, is a risk many wealthy people can afford to take, but for some it would mean violating the terms of plum mortgages they secured at ultra-low rates. Usually it’s a matter of financial math, weighing whether it’s cheaper to lose the mortgage or ditch insurance premiums, said Jeff Kaplan, who advises family offices at broker Risk Strategies.

Inflation is another factor driving rates skyward: Insured values have ballooned due to soaring housing prices and the record-high cost of rebuilding.

Properties’ exposure base — a measure of the value of what’s insured — is up 25% to 40% since 2020. The last time Kaplan saw such pressure on rates was in 2004 around the time of Hurricane Ivan. “Wind insurance at the time was $10,000 to $20,000 per $1 million of rebuild cost, but the houses were $1 million. Now they’re $10 to $20 million and the rates are similar if not higher,” he said. “It’s a perfect storm for the negative.”

The story is similar in other wealthy enclaves.

In Aspen, for instance, where wildfires are a worry, home insurance premiums are rising too. A recent policy renewal for one multimillion-dollar home in the area was up sixfold, to $36,000, said Oscar Seikaly, chief executive officer at NSI Insurance.

Wall Street West Is Booming in Aspen With New Crop of Elite Residents
Home insurance premiums are rising in Aspen, where wildfires are a worry. Photographer: David Williams/Bloomberg
“Florida was the beginning,” Seikaly said. “But now, between the fires and the floods and everything else that’s happening, it’s trickling to other areas.”

In California, soaring premiums are colliding with decades of gentrification. Big insurance companies like Allstate and State Farm have stopped issuing new home insurance policies, blaming both environmental losses and problematic regulations. Backup options are often limited to a certain value so mansion owners have to turn to specialty insurers like AIG or Lloyd’s for coverage. Those firms don’t need to get their rates approved by the state and can charge what they wish.

“There’s no company in the world that’s willing to take on a $50 million house in Napa Valley right now without charging over $1 million in insurance,” Seikaly said. A client with a $50 million home and a sculpture garden to match recently decided to forgo homeowners insurance altogether.

Fires Erupt in California Wine Country, Fueled By Hot, Dry Winds
A helicopter drops water over a home in Napa County during the Glass Fire in 2020. Photographer: David Paul Morris/Bloomberg
A big question is how all of this will ripple through the real estate market and reshape communities that are coping with an influx of new residents — and new money.

Miami real-estate agents say soaring insurance costs have deterred some deals. Danny Hertzberg, a founding partner of the Jills Zeder Group, says first-time homebuyers, who don’t have boats or luxury cars or other houses to negotiate with the insurance companies for bundle discounts, face “a disproportionate impact.” But with the city loudly promoting itself as Wall Street South — and a low-tax alternative to places like New York — many high-end buyers are betting that, for them, the costs will be a wash.

Others are finding workarounds like reclassifying items such as custom furniture — normally captured under a homeowners policy — as fine art, an area where rates haven’t increased as much. People who pare back coverage or choose to forgo insurance altogether, known as self-insuring, are increasingly beefing up mitigation efforts, like building cisterns and hiring private firefighting squads.

Regardless of approach, brokers say the affluent are taking storm threats with renewed seriousness. Katherine Frattarola, head of the private client division for HUB said her team sent massive garbage bags to one client to wrap their Ferrari in so if the garage flooded, the car would float. Another client drained their swimming pool and moved their vast collection of expensive statuaries down into it to protect them from extreme wind.

What had been a tedious, check-the-box fixture of rich people’s lives is suddenly an area to obsess over, even gamify, and debate at cocktail parties, said Zobian. “A lot of families are almost in culture shock over it.”

Rim, the college consultant, said his insurance broker has told him his premium could potentially double if another major hurricane were to hit Florida. “At that point, I’m just self-insuring,” he said.

--With assistance from Katherine Doherty.

This article was provided by Bloomberg News.