New data reveals the major factor driving cost increases for homeowners nationwide: 'Levels they've never seen before'

Insurance rates are on the rise, and frequent extreme weather events are partly to blame.

What causes rising insurance costs?

There are many factors at play that determine a homeowner's insurance premium. Rising material costs, labor shortages, and more recently, extreme weather events. 

Extreme weather events — like floods, tornadoes, hurricanes, and wildfires — are becoming more intense due to a warming climate. Many such events are growing more frequent, too. 

The U.S. Department of State's 2025 National Adaptation and Resilience Planning Strategy found that "in the 1980s, the country experienced, on average, one (inflation-adjusted) billion-dollar disaster every four months. Now, there is one every three weeks, on average." 

With millions of homeowners across the country at risk of devastating property damage from extreme weather events, insurance companies are raising costs.

How insurance is changing

For homeowners in high-risk areas, insurance rates are absurdly high. A recent report from the U.S. Department of Treasury's Federal Insurance Office revealed that "consumers living in the 20% of ZIP Codes with the highest expected annual losses to buildings from climate-related perils paid $2,321 in premiums on average, 82% more than those in the 20% lowest climate-risk ZIP Codes."

Not only are these homeowners subjected to extremely high insurance costs, but they're also at a significantly higher risk for policy non-renewal — insurance companies dropping their coverage.

Homeowners insurance isn't legally required, but homeowners financing their home will find that mortgage companies or banks often require insurance, leaving them with no choice but to pay a hefty premium.

Why you should care about a warming climate's effect on insurance rates

Monash University notes that "it's becoming a housing affordability issue and an economic management issue." 

As risk increases, homeowners insurance becomes less accessible. Rising insurance premiums disproportionately affect low-income homeowners who can't afford to protect their homes. A flood or tornado could leave these homeowners with no house and no coverage for anything lost, either.

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As the climate changes, homeowners whose homes were previously in low-risk areas are sometimes quickly finding themselves in high-risk zones with dropped coverage.

Adrianne Todman, former acting secretary of the U.S. Department of Housing and Urban Development, told NPR that "increased insurance costs are now impacting our general ability to provide housing affordably to Americans across the country." 

"So we have first-time homeowners who are unable to purchase a home because of the unexpected cost of insurance," Todman added. "We have some of our existing affordable housing providers, who already provide affordable housing, seeing their insurance costs go up by, you know, levels they've never seen before."

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