Climate Change and Home Insurance: Understanding the Impact
Recent years have brought one natural disaster after another in the U.S., from record heat waves and severe convective storms to hurricanes, wildfires, and inland flooding. This surge in extreme weather events illustrates the consequences of climate change. Experts warn that these risks are intensifying, posing significant challenges to homeowners and insurers alike.
Understanding the Effects of Climate Change
According to NASA, global mean sea level has risen by roughly 10 centimeters since 1993 and is currently increasing at about 4–5 millimeters per year, driven by ocean warming and land‑ice loss. The IPCC reports human‑induced warming of about 1.1°C (2011–2020 vs. 1850–1900) and projects end‑century global temperature increases likely in the range of roughly 1.3–5.7°C depending on emissions scenarios. The WMO confirms 2023 as the warmest year on record at about 1.45 ± 0.12°C above 1850–1900, and its near‑term outlook assigns ~80% odds that at least one year in 2024–2028 exceeds 1.5°C above pre‑industrial levels (WMO 2024 update). Greenhouse gases continue to rise, with atmospheric CO2 at Mauna Loa setting a seasonal peak above 426 ppm in May 2024 (NOAA GML).
Scott W. Johnson, a home insurance expert with Marindependent Insurance Services, LLC, based in California, a state currently battling wildfires, explains, “Floods, brush fires, even landslides can be attributed to warmer, dryer temperatures that are partially caused by global warming.” Observations show U.S. heat extremes increasing and warm nights becoming more common (NOAA USCEI), while heavy precipitation events—especially in the Northeast and Midwest—have become more frequent and intense (EPA Heavy Precipitation indicator).
Climate Change’s Impact on Home Insurance
Weather- and climate‑driven losses have surged, and homeowners are seeing the effects in coverage and price. The U.S. experienced a record 28 separate billion‑dollar weather and climate disasters in 2023 with an estimated total cost near $93 billion, followed by an even higher record count in 2024 (NOAA NCEI). Globally, insured natural catastrophe losses were about USD 108 billion in 2023, with an outsized share from U.S. severe convective storms (hail, wind, tornado)—a key driver of homeowners losses (Swiss Re sigma 1/2024). As Ethan Taub, CEO of Loanry, notes, “Home insurance rates are changing because the climate is,” and recent indices corroborate this: quoted home insurance premiums rose about 23% year over year as of May 2024 (Policygenius Price Index).
Andrew Roderick, CEO of Credit Repair Companies, concurs that climate change affects premiums and coverage availability. Geographic disparities are stark: 2024 averages for a standardized profile were roughly $6,000+ in Florida, $5,000+ in Louisiana, $4,400–$4,600 in Texas and Oklahoma, and about $3,800 in Colorado, versus a national average near $2,600 (Insurance.com 2024). Elevated catastrophe activity and rebuilding cost inflation have also increased claim severity in homeowners lines, sustaining upward pressure on rates (LexisNexis 2024 Home Insurance Trends).
As Melanie Musson, a home insurance expert, explains, “The more storms homes endure, the higher climate-related home insurance premiums will rise. To remain profitable, insurers need to collect more in premiums than they pay out in claims.” In high‑risk markets, carriers have tightened underwriting, raised wind/hail or hurricane deductibles, and in some cases non‑renewed policies; for example, State Farm announced roughly 72,000 California property policy non‑renewals in 2024 amid catastrophe and reinsurance cost pressures (California DOI).
Where Climate Change Hits Hardest in the U.S.
NASA, WMO, and the IPCC document intensifying physical signals that shape U.S. risk:
- Higher temperatures: 2023 was about 1.45 ± 0.12°C warmer than 1850–1900, the hottest year in the instrumental record (WMO 2023; NASA temperature).
- Longer warm seasons and more warm nights, increasing heat stress and energy demand (NOAA USCEI).
- Heavier downpours, especially in the Northeast and Midwest, elevating inland flood risk (EPA).
- More frequent heatwaves and drought-to-deluge variability across regions, complicating water management and agriculture (NOAA USCEI).
- High-impact tropical cyclones and severe convective storms producing large economic and insured losses in the Central/Eastern U.S. (NOAA NCEI).
- Sea-level rise: By 2100 (vs. 1995–2014), the IPCC’s likely global mean sea-level rise ranges are 0.44–0.76 m (≈1.4–2.5 ft) under a mid-range scenario and up to 0.63–1.01 m (≈2.1–3.3 ft) in a high‑emissions scenario; larger rises cannot be ruled out due to ice‑sheet uncertainties (IPCC AR6). Observed rise is ~4–5 mm/yr with continued acceleration (NASA).
Certain U.S. regions are at higher risk, particularly areas prone to wildfires, severe convective storms (hail/wind/tornado), hurricanes, coastal flooding, and inland flooding.
Regional Effects of Climate Change
| Region | Most Common Issues |
| Northeast | Rising high-tide flooding and sea-level exposure; more frequent heavy 1‑day rain events and inland flooding; increasing heat and warm nights (NOAA HTF; EPA; USCEI) |
| Northwest | Hotter summers and warm nights; strong winter storms with rain‑on‑snow flood potential; coastal erosion and wildfire exposure (USCEI) |
| Southeast | High-tide flooding and sea-level rise impacts; extreme heat and humidity; tropical cyclones and compound flooding (NOAA HTF; NOAA NCEI) |
| Midwest | Large increases in heavy downpours; riverine/urban flooding; warmer nights and heat stress (EPA; USCEI) |
| Southwest | Intense heat and multi‑year dryness punctuated by flash‑flood episodes; elevated wildfire risk (USCEI) |
Natural erosion and climate change are altering the terrain of many communities. Johnson notes, “Homes once low-risk are now high-risk flood zones, leading to increased insurance costs.” Along many Atlantic and Gulf Coast sites, high‑tide (nuisance) flooding days continue to rise as seas rise, pushing saltwater farther inland during routine high tides and minor storms (NOAA High‑Tide Flooding).
How to Safeguard Your Home Against Climate Change
Musson advises that relocation isn’t always the solution, as insurance rates vary widely. Moving to lower-risk areas can reduce rates, but moving to higher-risk areas will likely increase them. In 2024, example averages for similar coverage were ≈$6,000+ in Florida vs. ≈$2,600 nationally, with Texas/Oklahoma ≈$4,400–$4,600 and Colorado ≈$3,800 (Insurance.com). Nationwide quoted premiums rose about 23% year over year as of May 2024 (Policygenius), reflecting elevated catastrophe losses and rebuilding costs (NOAA NCEI; Swiss Re).
Insurance companies are adapting by offering new types of coverage. Hammill notes, “Carriers offer property coverage for upgrades to ‘green standards’ and are more likely to insure homes with protective features.” Many jurisdictions are formalizing mitigation recognition and risk‑based pricing—see California’s evolving framework to stabilize availability and reward wildfire risk reduction (California Sustainable Insurance Strategy)—and Florida’s statute requiring wind‑mitigation credits for qualifying features (Florida §627.0629). Buyers can also layer parametric covers (for rapid, trigger‑based payouts) alongside traditional indemnity to speed recovery (World Bank catastrophe risk transfer).
Reviewing your policy to ensure coverage against natural disasters is crucial. Merrill advises, “Find out which disasters your policy covers and consider additional coverage if necessary.” Standard homeowners policies typically exclude flood; consider separate flood coverage through NFIP or private markets where exposure exists, and understand exclusions and waiting periods. For water damage generally, know what is and isn’t covered and consider prevention measures to reduce claims (Insurance Information Institute).
Proactively maintaining your home can also reduce rates. Taub suggests, “Address damages promptly and reinforce your home’s structure. Insurers may offer rate reductions for these efforts.” Proven steps include upgrading to an IBHS FORTIFIED Roof (sealed deck, enhanced nailing, locked edges) to cut wind/rain intrusion, implementing wildfire hardening and defensible space recognized by state programs (e.g., California’s Safer from Wildfires mitigation discounts), and installing automatic water‑leak detection with shutoff. Many carriers file protective‑device credits, such as for monitored alarms and approved leak‑shutoff systems (Travelers discounts). Working smoke alarms reduce the risk of dying in a reported home fire by about half; residential sprinklers further cut death rates and property loss (NFPA smoke alarms; NFPA sprinklers).
For those facing rising rates, comparing quotes from various companies is beneficial. This can help find affordable insurance options that fit your needs.
The Bottom Line
With climate change amplifying extreme weather and repair costs, insurers are reassessing their protection strategies. Recent data—record global warmth in 2023 (~1.45°C above 1850–1900), a record number of U.S. billion‑dollar disasters, and global insured catastrophe losses around USD 108 billion—explain the premium pressure homeowners are experiencing (WMO; NOAA NCEI; Swiss Re).
“The best advice is to plan ahead,” Merrill advises. “Don’t wait for disaster to strike before acting.” Build a layered risk strategy: verify perils and limits, add separate flood where needed, consider parametric add‑ons for fast liquidity, and invest in documented mitigation that can reduce losses and, in many states, earn premium credits (California strategy; Florida mitigation credits).
By taking these steps, you can better protect your home and ensure peace of mind.
