By Logan Mullins
TAMPA, Fla. — A report by the Consumer Federation of America found that home insurance premiums nearly doubled the inflation rate from 2021 to 2024. Inflation rose 13.2% while home insurance costs rose an average of 24% over the same time period.
Over the past decade, climate-related claims have increased from 31% to 38% in insurer costs, according to Forbes. While a shift of 7% seems small, the insurance industry measures risk in fractions of percentages: even a 0.01% change is something that underwriters consider when building policies.
The EPA found that extreme weather is becoming more frequent. Weather disasters are no longer random “Acts of God” — they’re becoming a common occurrence for insurers. Climate change isn’t just making weather events more common — it’s making them more destructive.
“We’re talking about unbelievable problems with extreme weather,” said Dr. Daniel Schrag, Sturgis Hooper Professor of Geology at Harvard University.
According to the World Wide Fund for Nature, longer dry seasons fuel bigger wildfires, shifting rainfall patterns trigger more frequent floods, and warmer oceans supercharge hurricanes.
As the science has shifted, so has the business. For insurers, these aren’t abstract warnings: they’re mounting payouts measured in billions.
In 2000, global weather-related catastrophe losses were $16.27 billion. In 2024, global weather-related catastrophe losses were $134.63 billion, an increase of 727% in costs.
Data sourced from Swiss RE Institute
Insurance companies have only two options: drop coverage or raise rates.
In 2023, State Farm ceased issuing new homeowners’ insurance policies in California. The company cited “rapidly growing catastrophe exposure” as one of its core reasons. Just this year, Nationwide stopped renewing all homeowners’ policies in California.
California isn’t the only state impacted. Farmers Insurance pulled out of Florida in 2023, citing the hurricanes as the predominant reason. A crisis once relegated to the coastlines now spreads into the heartland of America. SECURA plans a complete end to all personal lines in over a dozen states. States where major insurances left — projected through December 2025.
Aon PLC President Eric Andersen told a US Senate committee that climate change is creating a “crisis of confidence” around the insurance industry. Insurers are losing more and more each year to once “rare” weather phenomena. These losses don’t disappear — they’re passed down as premiums.
In 2001, the average premium of homeowners’ insurance across the United States was $536, according to Consumer Shield. Today, the average premium of homeowners’ insurance across the United States is $2,801.
In states where natural disasters are already a regular occurrence, costs are even worse. In Oklahoma and Nebraska, where tornadoes and hailstorms ravage hundreds of homes a year, and homeowners experience the highest premiums in the country, averaging $6,133 and $5,912, respectively.
Insurance has shifted from a reasonable expense to one of the most significant expenses a family faces.
Furthermore, homeowners’ insurance premiums are taking up a larger percentage of a household’s income. Looking back at 2001, Americans spent only 1.19% of their annual income on homeowners’ insurance. Today, Americans spend over 2.09% of their income, as reported by the Insurance Research Council (IRC).
For middle-class families already battling inflation, rising coverage is squeezing an already tight budget. Rising costs have led many Americans to drop coverage altogether.
In the insurance world, going “bare” means forgoing homeowners’ insurance and retaining the risk of loss. A decade ago, this was a rare occurrence, with only 5% of homeowners opting to retain risk in 2015.
Data sourced from Insurance Information Institute.
Since then, this number has more than doubled. Today, 12% of homeowners have no coverage at all. In Florida, one of the most expensive states for coverage, Reuters reported that up to 20% of homeowners do not have homeowners’ insurance. For these families, the gamble is clear: risk it all to cut down on costs and pray nothing happens.
Data Sourced from Insurance Information Institute.
But what happens when the worst occurs? They lose everything. Nearly four out of ten Americans cannot cover a $400 expense; how could they ever afford to rebuild a home worth hundreds of thousands of dollars?
Professor Daniel Schwarcz, a law professor at the University of Minnesota, describes home insurers as “the canary in the coal mine” on climate issues. He’s argued that homeowner’s insurance markets are struggling because of the climate change crisis.
Paying for insurance is paying to mitigate risk. It’s a simple equation. If risk increases, the cost of insurance rises with it.
Throughout the past few decades, homeowners have seen insurance costs skyrocket. If both families and insurers can no longer afford to pay or offer insurance, then the system doesn’t just strain — it collapses.
Climate change isn’t a distant natural force destroying oceans thousands of miles away. It has already become a monthly bill, one that is quietly pricing Americans out of the very homes they’re struggling to protect.
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Thumbnail photo courtesy of Public Domain via Wikimedia Commons.