Map Shows Rising Home Insurance Costs by State as Climate Risks Reshape the Market

Extreme weather events—like California’s devastating wildfires and a rare snowstorm in the South—are reshaping the U.S. insurance and real estate markets, burdening homeowners with rising costs.

Last week, states in the Gulf Coast experienced an unprecedented snowstorm, with several areas in Florida potentially surpassing the state’s all-time snowfall record of 4 inches, set in 1954. It’s also estimated that the Southern states could face losses of $15 billion to $17 billion due to the storm, according to AccuWeather.

Meanwhile, California is battling unprecedented wildfires. The Palisades and Eaton fires, which scorched a path of destruction in Pacific Palisades, Malibu, and Altadena, continue to burn. Together, they’ve destroyed over 55,000 acres and 16,000 structures as of Friday, with insured losses estimated at $45 billion, according to Cal Fire. Thousands of emergency crews were also fighting more recent blazes, including in San Diego and Ventura County.

Globally, the economic toll of extreme weather events is staggering. Unchecked climate risks could cost up to $38 trillion annually by 2050, rivaling the 2008 financial crisis, according to a study in Nature.

On top of that, climate risks could cost global real estate up to $559 billion—28% of its value—by 2050, a report by S&P Global Market Intelligence has found.

This all contributes to rising home insurance premiums. From 2020 to 2023, those costs have increased by 33%, rising from $1,902 per year to $2,530, based on research by economists Benjamin J. Keys and Philip Mulder.

“The price of reinsurance nearly doubled between 2018 and 2023, and this cost was largely passed on to homeowners,” Mulder tells Realtor.com®.

“This sharp increase, which outpaced overall inflation, highlights the growing impact of climate-related risks on insurance costs for homeowners across the country.”

Hover over the map to see how home insurance has surged across the U.S.

The researchers found a strong link between disaster risk and insurance costs. By 2023, homeowners in areas with high disaster risk were paying about $500 more annually than those in low-risk areas, up from a $300 difference in 2018.

The impact of rising reinsurance costs varied greatly by location. For example, in Florida, where insurers rely heavily on reinsurance, premiums increased much more than in neighboring Georgia, which has less reinsurance exposure.

But there were also declines in insurance premiums, which were mostly concentrated in the Midwest and rural regions. In Michigan's Alpena County, premiums dropped 38%, while Brooks County, TX, saw a 42% decrease as oil jobs disappeared. Across the rural Midwest, premiums fell by double digits as farms consolidated and small towns shrank. 

In 2024, the U.S. experienced 27 billion-dollar weather disasters, causing 568 deaths and $182.7 billion in damages, according to NOAA.

This made it the fourth-costliest year on record, with cumulative costs since 1980 exceeding $2.9 trillion. The 2024 analysis, current as of Jan. 10, 2025, may rise as more data becomes available.

In comparison in 2023, there were 28 billion-dollar disasters, causing $93 billion in damages—the highest annual total recorded by NCEI.

Insurers pull out of high-risk areas

Across the U.S., insurers have not only increased their premiums in high-risk areas, but they also stopped covering some altogether.

In the Pacific Palisades neighborhood of Los Angeles, exposure under California’s FAIR Plan soared from $436 million in 2020 to nearly $3 billion by September 2024—a sevenfold increase. FAIR policies in the area rose 85% over the past year, with statewide exposure hitting $450 billion, up 61% from 2023.

Private insurers like State Farm pulled out, dropping 70% of its Pacific Palisades customers last year. Homeowners now face fewer and more expensive options.

The scale of destruction often strains insurance systems, delaying remediation and driving up costs. And policies covering additional living expenses might not adequately cover prolonged displacement due to such disasters.

The crisis isn’t isolated to California. Americans in states facing wildfires, floods, hurricanes, and now snowstorms in Florida and Texas are grappling with similar challenges.

Homeowners in these areas also face higher insurance bills as risks increase. This puts extra financial strain on residents in high-risk areas, sometimes making it harder to afford their homes.

It can also put a strain on their credit scores, which are a critical factor in the homebuying process, influencing insurance premiums, mortgage approvals, and overall accessibility to homeownership.

As private insurers retreat, many homeowners are forced to rely on costly public plans with less coverage. As a result, homeowners in wildfire-prone areas are retrofitting for resilience, but financial aid remains scarce.

The California FAIR Plan, which serves as the state's insurer of last resort, has seen significant growth. The number of policies grew from less than 500,000 in 2016 to 1.3 million in 2023, a 168% jump.

"In today’s housing market, many homebuyers have to consider the costs of homeownership beyond just a mortgage payment," says Realtor.com senior economic research analyst Hannah Jones.

"High home prices and elevated mortgage rates mean that potential homebuyers face expensive housing payments, but the situation is even worse for buyers in areas that face high risk of climate-related events."

As climate risks grow, the U.S. housing market faces mounting pressure to adapt, and home insurance might become more difficult and expensive to obtain. As a result, home shoppers in high-risk areas face even higher housing costs, which could result in falling housing demand in affected areas, adds Jones.

But some pockets of the market are already starting to adapt, and programs like Alabama’s Strengthen Alabama Homes show how small changes can make a big difference. By offering grants to reinforce roofs and improve wind resistance, they help homeowners protect their properties from severe weather.

Tackling bigger climate risks needs collective investment in smarter, stronger infrastructure.