Landmark Climate Lawsuit Links Rising Homeowners Insurance Costs to Fossil Fuel Industry Conduct

A new lawsuit filed last week in the U.S. District Court in Washington State targets major oil and gas companies over recent sharp increases in homeowners’ insurance premiums, linking these rises to climate-related damages exacerbated by fossil fuel industry practices. The plaintiffs, two Washington homeowners, report doubling insurance costs since 2017 and are initiating a class action suit for all homeowners purchasing insurance post-2017 nationwide. The suit alleges that a longstanding pattern of deception and misinformation by oil industry defendants about the climate impacts of fossil fuels has contributed directly to the climate crisis, which in turn drives extreme weather events and increases losses for insurers. This leads to sharply rising premiums and reduced insurance availability in high-risk areas. Washington State has seen a 51% increase in homeowners’ premiums over six years, with national premiums increasing nearly 9% faster than inflation from 2018 to 2022 per the Federal Insurance Office’s report. The case, Kennedy v. Exxon et al., includes federal and state law claims such as violations of the RICO Act, fraudulent misrepresentation, civil conspiracy, unjust enrichment, nuisance, and consumer protection violations. It identifies defendants including ExxonMobil, BP, Chevron, ConocoPhillips, Shell, and the American Petroleum Institute (API), which collectively have generated $2.4 trillion in profits since 1990. The plaintiffs argue the fossil fuel industry engaged in a coordinated campaign to deny climate science, obstruct policies, and delay clean energy transitions, thereby escalating climate impacts and insurance risks. API responded by denouncing the suit as baseless and emphasized that climate policy should be determined by Congress, not courts. Industry lobbying efforts, particularly by API, have historically opposed climate legislation. Legal experts note the challenge in quantifying the specific impact of climate deception on insurance losses but recognize the clear connection between climate change and rising insurance costs. This litigation approach parallels strategies used in tobacco litigation, revealing legal avenues to hold industries accountable for long-term public harm. The lawsuit emerges amid increasing climate accountability cases against fossil fuel companies brought by various government entities and individuals related to damages from extreme weather events. Previous similar suits have faced procedural barriers like statute of limitations dismissals but ongoing litigation continues to explore accountability. Upcoming decisions by the U.S. Supreme Court on related cases could influence the trajectory of these lawsuits. Legal analysts emphasize the broader financial implications of the insurance crisis driven by climate change, highlighting risks of declining property values, mortgage difficulties, and potential financial market instability. The case underscores insurers’ growing exposure to climate risk as extreme weather events intensify. It also highlights the evolving regulatory and legal landscape affecting both the fossil fuel and insurance industries as stakeholders navigate emerging risks and liabilities. This first-of-its-kind lawsuit targeting oil and gas companies for climate-driven insurance cost increases represents a strategic development in environmental and insurance litigation. It signals expanding efforts to connect industry conduct to consumer financial impacts in the insurance marketplace, emphasizing the intersection of climate risk, regulatory compliance, and corporate accountability.