Climate change is driving up insurance costs for homeowners across the US, with skyrocketing rates and even dropped policies in many states. In 2024, 27 weather-related disasters caused at least $1 billion in damages, with the average annual cost of those events topping $149 billion – more than double the annual average cost between 1980 and 2024.
Homeowners in states prone to wildfires, hurricanes, and flooding are facing particularly high insurance premiums, with some seeing a 50% increase over three years. The average US homeowners insurance premium has jumped 33% from 2020 to 2023, rising to $2,300 per year.
Insurers are responding to the increasing frequency and intensity of climate-related disasters by hiking premiums to recoup their payouts. Researchers say that this is a “serious pocketbook issue” for many Americans, with some facing difficulties in securing coverage or being dropped by their insurers.
The crisis is not limited to coastal states or areas prone to wildfires, but is also affecting midwestern and mountain states. According to a Senate Budget Committee report, 15 states have seen significant increases in non-renewal rates, including Nebraska and Ohio.
As climate-related disasters become more frequent, property values are at risk if insurance becomes unaffordable. Insurers are readjusting their risk models and boosting premiums to cover increased capital reserves and buy more reinsurance. Experts predict that homeowners will see no relief from heavy insurance costs anytime soon, as companies seek to recoup their losses.
“With a more volatile atmosphere, there is more latent energy in the climate,” says Jeremy Porter, head of climate implications research at First Street. “This leads to more intense thunderstorms and flooding events tied back to climate change.”
Source: https://www.cbsnews.com/news/los-angeles-fires-california-insurance-rates-dropped-coverage-us