Home insurance is getting more expensive in the United States, and insurers are pulling back from some regions as the cost of disasters grows. That trend is stretching the limits of what ordinary Americans can afford to protect their homes.
Community leaders across the country are sounding the alarm about a nascent, but growing, crisis — one that's likely to get worse as climate change drives more severe hurricanes, floods and wildfires.
"The risk of many weather-related extreme events is growing as the planet warms, and some of those impacts are coming fast and furious now," says Carolyn Kousky, an economic policy expert at the Environmental Defense Fund and longtime property insurance researcher.
Disaster costs are also rising because people continue to move to coastal regions vulnerable to hurricanes and to forested areas prone to wildfires. That means more property is in harm's way. And inflation, which has hit the cost of building materials particularly hard, has made it more expensive to rebuild.
Nationwide, the cost of home insurance rose about 8% faster than overall inflation between 2018 and 2022, according to a landmark report published by the Treasury Department in January.
As losses from disasters mount, insurers are passing the costs on to consumers. "We've seen growing prices everywhere," Kousky says.
That's hitting family budgets that are already stretched thin by rising food and transportation costs. Home insurance is required for most homeowners in the U.S. who have a mortgage. And if you rent, your landlord probably passes along the rising cost of insurance by raising your rent.
"If people want to keep building more expensive homes in areas with high climate risk, the cost to insure those are going to increase," says Robert Gordon, a senior vice president at the American Property Casualty Insurance Association, an industry group.
NPR visited three communities, in three different parts of the country, to understand the cascading effects of unaffordable home insurance, and what might be done to bring down prices.
Home insurance woes are unfolding nationwide, not just in wildfire or hurricane-prone areas
Some coastal states have been grappling with expensive home insurance for decades, but in recent years the problems have arrived in the middle of the country.
Areas that are prone to hurricanes, such as the Gulf Coast, have long had some of the country's most expensive insurance markets. Homeowners in the region have also seen a spike in insurers dropping coverage in recent years. Florida's nonrenewal rate jumped by 280% between 2018 and 2023, according to a 2024 report from the Senate Budget Committee.
California, which has suffered billions of dollars of property damage from wildfires, has also struggled as major insurance companies have pulled out of the state in recent years.
But the center of the country has also become a hot spot, according to the Treasury report from earlier this year. The average price of property insurance in the Great Plains was significantly higher than the national average, with consumers paying upwards of 45% more than the average in some parts of the region.
That's in part because of rising losses from hailstorms. In 2024, hailstorms caused an estimated $160 billion in damage to homes nationwide, according to the Insurance Information Institute, an industry-run think tank.
Across the central and eastern U.S., the weather conditions that can produce hail that's at least the size of a billiard ball have gotten more common, according to Deborah Bathke, Nebraska's state climatologist. And the Great Plains are expected to have more frequent hail as the planet warms up.
In Cozad, Neb., a hail storm last year caused an estimated $100 million in damage, according to local insurance agent Brian Messersmith, in a town of just 4,000 people. After the storm, many homeowners and business owners in town say they were dropped by their insurers and forced to scramble to find new, generally more expensive, policies. Others saw the price of their existing policies go up significantly.
The average cost of homeowners insurance in Nebraska this year is nearly $6,400, according to Bankrate. That's the highest in the country, and almost $4,000 above the national average.
"It's just becoming unaffordable in our state, is the new reality," says Josh Tapio, an insurance agent with All Lines Insurance in Omaha, Neb.
Unaffordable home insurance is already pushing out middle class residents in Florida
Along Florida's southwest coast, Realtors say a wave of foreclosures could be coming as people struggle to pay for homeowners and flood insurance.
"There are people that thought they had set themselves up to retire in their home and be able to afford it on their fixed income that can't do that anymore," says Jessica Gatewood, a Realtor in Fort Myers. "It boils down to insurance costs."
Floridians are paying nearly $5,800 on average this year for home insurance, according to Bankrate. That's the third-highest rate in the country and about $3,350 above the national average. On top of home insurance, a lot of homeowners in Florida's coastal communities also have to pay thousands of dollars a year for flood insurance.
Shelton Weeks, director of the Lucas Institute for Real Estate Development and Finance at Florida Gulf Coast University, says high insurance costs appear to be depressing home values in the area.
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When insurance prices rise, the overall cost of homeownership goes up, limiting the pool of potential buyers able to afford the monthly expense. That puts pressure on sellers to lower their asking price to be more competitive. In other cases, buyers are avoiding houses with high insurance costs because they don't want to live in risky areas, says Gatewood, the Fort Myers Realtor. Researchers at Florida State University found a 10% increase in the cost of homeowners insurance reduces housing prices by 4.6%.
In Lee County, where Fort Myers is located, home values in September were down more than 10% from a year earlier and almost 16% lower than in August 2022, the month before Hurricane Ian devastated parts of the county, according to Zillow, a real estate website.
What's happening in southwest Florida is a warning for communities around the country, says David Burt, chief executive of DeltaTerra Capital, an investment research and consulting firm focused on climate risks. Burt's firm estimates that in about one in five U.S. communities, home values need to fall by around 30% in the coming years to account for rising home insurance costs.
That sort of decline in home values could fuel mortgage defaults, Burt says. When people owe more for a home than their properties are worth, they lose an incentive to continue repaying their lenders. If defaults rise, Burt says the impact would be felt across the U.S. housing market.
"If this does lead, as we would expect, to fairly widespread foreclosure events in Florida and California and lots of other places, then, at some point, the cost of a mortgage goes up everywhere," Burt says.
One way to lower the cost of disasters is for homeowners and communities to better protect themselves by investing in things like fortified roofs and flood panels that can rise automatically to stop water from getting into buildings. That kind of work has already started, but consumer advocates say people aren't yet seeing significant benefits in the cost or availability of home insurance.
One solution? Give homeowners, and communities, credit when they do things to protect against extreme weather
Lake County, Calif., has come to expect wildfires. Where some communities have lost homes in one catastrophic blaze, Lake County has seen nine since 2015. Its rolling hillsides are covered in trees and brush. The repeated losses have been a wake-up call, spurring the community to begin a broad range of projects to lower the wildfire risk.
In the Kelseyville neighborhood, residents are getting home makeovers. Flammable vegetation is being cut back, bark mulch is being replaced with gravel and wooden gates are being replaced with metal ones. The goal is to retrofit homes so they're much less likely to burn, resistant to the tiny, airborne embers that ignite most houses.
The program is part of a new pilot, funded by state and federal dollars, to improve the safety of entire neighborhoods by clustering the improvements. Since wildfires spread from house to house once they begin, fortifying groups of houses dramatically improves the chances they'll survive. Lake County is also working on cutting back vegetation surrounding neighborhoods, creating fuel breaks and safer evacuation routes.
"The insurance crisis is one of the symptoms that is showing us our vulnerabilities," says Jessica Pyska of the Lake County Board of Supervisors. "We want our communities to be safe and we need them to be insurable and we need to have lower risk."
Still, despite Lake County's work, the insurance outlook keeps getting worse. Insurance policy cancellations have risen faster in Lake County than almost anywhere else in the country, according to the 2024 report from the Senate Budget Committee. The only option for many residents is California's last-resort insurance, the FAIR plan, which is currently seeking approval from state regulators for a 36% increase in premiums.
Insurance companies in California have begun offering small discounts to homeowners that retrofit their homes. But larger community-wide efforts are often not reflected in the companies' risk analysis. One problem is that insurance companies aren't necessarily gathering data about how communities are reducing risk.
"If that information is not accessible on a consistent basis through a trusted source, insurance companies cannot legitimately rely on it," says Nancy Watkins, consulting actuary with Milliman, a risk analysis firm. "It's in California's very best interest to make sure that the insurance industry is aware of it."
Watkins is helping launch a database of community and landscape wildfire projects, known as the WUI Data Commons. The idea is to aggregate that information to help communities understand their risk and for insurance companies to reflect those efforts in their premiums. Watkins says there's still a lot to be figured out, like how to protect consumer privacy and to get insurance companies on board.
Disaster experts say given how vulnerable many communities are to wildfires and storms, it's vital that the insurance industry incentivize preparation by rewarding those efforts with better insurance rates.
"It's starting, but more needs to be done," Kousky says. "It's important they do that to build trust in the market, to send an information signal to consumers and communities, and to create that financial incentive."
NPR's Ryan Kellman and Robert Benincasa contributed to this story.
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