The Impact of Climate Change on U.S. Homeowners Insurance Rates
Flat Rock, NC: When Tony Dunn moved from California to North Carolina, he aimed to evade climate-related natural disasters. However, his new community was soon struck by a hurricane, mirroring the very challenges he sought to escape. This highlights a growing trend where U.S. homeowners confront escalating insurance costs due to frequent climate events, impacting not only coastal states like Florida but also inland regions.
Dunn witnessed a stark 30% increase in his homeowners’ insurance premiums following Hurricane Helene in 2024, despite his property being unharmed. Researchers Benjamin Keys and Philip Mulder report an average premium surge of 86% in his county since 2018. Nationally, there has been a 58% rise in insurance rates, triggered by mounting climate risks across the industry.
Inland states such as Nebraska and Iowa are not immune, with Nebraska seeing a 20% premium increase from 2023 to 2025, and Iowa's rates soaring by 54% due to frequent hailstorms. A 2025 working paper by researchers from Columbia and Harvard Business Schools revealed that many U.S. households remain underinsured at mortgage origination, with policies covering merely 70% of rebuilding costs. Ishita Sen, a contributing researcher, emphasized the pressure on insurers to elevate premiums in response to rising climate risks, outpacing the financial capabilities of households.
The rising financial burden has led homeowners like Dee Dee Buckner in Marshall, NC, to reconsider their insurance choices. Following severe flooding from Hurricane Helene, her flood insurance premium surged beyond $1,700 annually, prompting her to switch to a less comprehensive homeowners’ policy. This underscores a broader issue: typical homeowners insurance often excludes flood damage, necessitating additional policies for at-risk areas. Keys and Mulder also point to construction cost inflation as a contributing factor to rising premiums, with climate change being the primary driver. The North Carolina Rate Bureau concurs, citing climate as the chief influence on increasing insurance rates.
Sarah Dickerson from the Kenan Institute of Private Enterprise stressed the universal impact of climate-related losses. As insurers withdraw from high-risk areas or terminate client relationships, market competition diminishes, potentially leading to price shifts. These strategic adjustments underscore the dynamic nature of risk assessment within the insurance industry and its repercussions on policyholder costs.