4 ways climate change is impacting home insurance, putting us at risk

Disaster insurance is breaking at a moment of crucial need. As climate change intensifies extreme weather, we’re seeing big shifts in the cost and availability of property insurance.

From escalating premiums to fewer options for homeowners, here are a few ways we’re feeling the impact across the United States.

1. Premiums are skyrocketing

If you’ve seen your premiums rise, you’re not alone. Extreme weather is among the factors driving up costs, alongside the growing expense of rebuilding, high cost of reinsurance and continued development in areas prone to disasters.

While prices are increasing all over, high premiums are hitting hot spots of climate risk like Florida, Louisiana and Texas particularly hard.

“Insurance is where many people are feeling the economic impacts of climate change first,” EDF economics researcher Carolyn Kousky told The New York Times.

2. It’s getting harder to find insurance

• Insurance companies are abandoning certain locations, even entire states. As one example, State Farm stopped offering new homeowners’ policies in California, where wildfires are a major concern.
   
• Some insurers are going broke. Both Louisiana and Florida have seen insurers become insolvent following recent hurricanes.
   
• The quality of coverage is starting to decline. Some insurance companies have begun to limit what they cover. As Kousky wrote in an op-ed on Earth.org, “Homeowners policies already exclude flood and now some insurers are excluding wind and fire, too.”

More ways climate change is affecting our lives

3. The public sector is taking on more risk

When people can’t get property insurance in the private market, many turn to public sector programs for coverage.

As of 2024, for example, the number of homeowners with policies in Louisiana’s state program had tripled since Hurricane Laura in 2020.

Public sector programs struggle with the same challenges of growing risk as the private sector — leading to some of the same problems, like rising prices for consumers.

4. Homeowners are taking on more risk

Disasters are hugely expensive. From lost income to cleanup, repair and rebuilding costs, households struggle to manage the financial burdens.

Research by EDF and others has identified insurance as a differentiator, leading to faster, more complete and more equitable recoveries.

Yet, as premiums soar and coverage options decline, news outlets report that some homeowners are being priced out altogether and living without this vital protection.

Lenders typically require homeowners’ coverage for those with a mortgage. But households that don’t have a loan might forgo insurance as good coverage becomes increasingly unaffordable and out of reach.

And without adequate insurance, natural disasters can become tipping points that set back hard-earned financial gains — especially for low-income households.

How can we fix the insurance problem?

EDF researchers are working to understand climate stress on insurance markets and exploring ways to make insurance and disaster recovery more effective and more equitable.

One thing we know? We have to reduce risks.

That means putting strong building codes in place and fortifying our homes, schools and businesses to better withstand hazards. It means rebuilding to high standards after a disaster in areas where it’s safe to rebuild.

And it means investing in our future by cutting climate pollution now. Together, we can build a safer, cleaner world.

More ways climate change is affecting our lives