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.

Worsening 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 — without building to safe enough standards.

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 pulling back from high-risk areas. For example, State Farm stopped offering new homeowners’ policies in California, where wildfires are a big 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.” They may also increase deductibles or cap the amount a policy will pay for certain types of damage.

3. People are relying on ‘insurers of last resort’

When people can’t get property insurance in the private market, many are turning to “insurers of last resort” — programs established by states to provide a safety net for homeowners.

These programs vary in structure. As one example, California’s FAIR plan is a not-for-profit association of insurers operating in the state, and it is not funded directly by taxpayers.

Still, when disaster strikes, the burden of paying out claims may be felt statewide. That’s because insurers of last resort are often allowed to recover some of their losses through charges called assessments that pass on costs to insurers and policyholders throughout a state.

That happened in Louisiana after Hurricane Katrina, and California’s FAIR plan is now issuing an assessment to help cover claims from the 2025 Los Angeles wildfires.

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 in places from California to Florida, 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.

More ways climate change is affecting our lives