Rising Insurance Costs Linked to Climate Crisis Hit US Homeowners Hard

Homeowners across the United States are facing steep increases in insurance premiums, primarily due to the escalating climate crisis, according to a report released by the US Treasury Department. The analysis reveals that individuals living in high-risk areas for climate-related disasters, such as wildfires and hurricanes, are enduring the most significant hikes, with premiums rising an average of 82% compared to those in safer regions over a four-year period leading up to 2022.

As insurance companies struggle to operate amid increasing climate risks, many have paused or withdrawn their policies, particularly in states like Florida and California, which are currently dealing with severe wildfire incidents. The report highlights that more homeowners are unable to pay these soaring premiums, raising the risk of policy cancellations. Notably, insurers canceled at least 10% of policies in over 150 high-risk zip codes in 2022.

David Jones, a former insurance commissioner in California, warned that "the climate crisis is driving an insurance crisis" and emphasized that the report illustrates the tangible costs associated with climate change. Janet Yellen, the Treasury Secretary, called attention to the dangerous trends of rising insurance costs and availability issues that threaten the long-term financial stability of American families.

In response to the insurance crisis, some states are setting up backup insurance options as companies halt writing new policies. The recent fires in Los Angeles, which could be among the most costly in California history, may further exacerbate these trends.

As the climate crisis continues to impact the housing and insurance markets, experts warn that obtaining mortgages might become increasingly difficult for many Americans, particularly as insurance is a requisite for home financing.