Rising Insurance Costs Due to Climate-Related Disasters

As climate change-linked disasters become more frequent in the U.S., homeowners nationwide are facing skyrocketing insurance costs—not just in states traditionally considered most vulnerable to climate impacts like Florida and California. The insurance crisis is particularly acute in wildfire-prone states such as California, Colorado, Texas, and Oregon, but is spreading to almost every region of the country, including the Midwest, Northeast, and Mountain states.

Research indicates that climate change is intensifying conditions that contribute to wildfires by drying vegetation and limiting water supplies, which extends wildfire seasons and increases the size and intensity of fires. In 2024 alone, there were 27 weather and climate disasters causing at least $1 billion each in damages, including hurricanes, floods, tornadoes, wildfires, drought, and hail. Between 2020 and 2024, these events cost an average of $149 billion annually—more than double the $65 billio annual average between 1980 and 2024.

Insurance Premium Increases

The average homeowners insurance premium increased by 33% from 2020 to 2023, rising from $1,902 to $2,530 per year, significantly outpacing the general inflation rate of about 18% during that period. In areas particularly prone to climate-related natural disasters, homeowners have seen premiums surge by approximately 50% over those three years, according to Benjamin Keys, a professor at Wharton and co-author of a 2024 study on the subject.

Jeremy Porter from First Street, a non-profit climate research firm, noted that insurance cost increases have been occurring for five consecutive years, correlating with increased severity of climate events. Surprisingly, states in the middle of the country like Kansas and Nebraska are also experiencing major insurance increases. While the average U.S. homeowners insurance cost is now about $2,300 annually, Nebraskans pay an average of $5,700, and Oklahomans pay about $4,800—approaching Florida's average of $5,500.

Policy Non-Renewals Across the Country

Beyond cost increases, many homeowners are struggling to obtain coverage at all, with non-renewal rates climbing sharply in states like California and Florida. Thousands of Los Angeles homeowners were dropped by their insurers last year, months before recent wildfires. However, the problem extends beyond these states. According to a Senate Budget Committee report from last month, while most of the top 10 states for insurance non-renewals were coastal states or those prone to wildfires, Oklahoma also ranked high, likely due to "increasing winds and hail from severe convective storms."

The next 15 states with high non-renewal rates include Midwestern states like Nebraska and Ohio, as well as Mountain states such as South Dakota and Montana. While non-renewal rates have more than tripled in Florida between 2018 and 2023, Oklahoma isn't far behind, with dropped policies nearly doubling during that period.

Broader Climate Impacts and Future Outlook

Porter explained that climate change is creating a more volatile atmosphere with more latent energy, resulting in more intense thunderstorms and heavy precipitation. Examples include the heavy rains and flooding in Vermont in July 2024 and Hurricane Helene's devastation in North Carolina. The Senate report emphasized that "insurance non-renewals are not only a problem for communities typically seen as being on the front lines of climate change" but also affect places like southern New England, parts of Montana, New Mexico, and areas of North and South Carolina.

As insurers adjust their risk models to account for climate-related disasters, they're increasing premiums to cover larger capital reserves and reinsurance costs. Experts predict that as wildfires, hurricanes, and other weather events intensify due to human-caused climate change, insurance accessibility and affordability will likely worsen. In extreme cases, property values could plummet if areas become uninsurable—an issue already affecting some communities vulnerable to wildfires and other disasters.

According to Porter, "We're in the middle of insurance price corrections—they will continue until insurance companies are able to be profitable... Really no matter where you are across the country, there is some climate hazard that you are exposed to."