Climate change is impacting insurance rates across the U.S. and it is predicted to contribute to a 7% increase in hard-hit Florida – bringing the average home insurance rate to $11,759 by the end of this year.
That’s according to a report by Insurify, a company focused on helping consumers save money on insurance.
“Home insurance rates are rising, influenced by climate catastrophes and inflation, leaving homeowners uncertain about future expenses. The average annual rate increased by 19.8% between 2021 and 2023, from $1,984 to $2,377,” said the report.
It also said that Texas has experienced $400 billion – even more than Florida at $390 billion – in damages and was ranked fourth for home insurance costs last year. Average annual rates in Texas are around $4,500.
The Florida Climate Center described climate change as the “variation in the Earth’s global or regional climates over time,” and it explained that “changes can be caused by natural processes internal to the Earth, such as continental drift which affects ocean currents, external forces, such as variations in sunlight intensity, or human activities, such as greenhouse gas emissions and land use change.”
Global warming refers to an increase in average global temperatures due to increased greenhouse gas, said the center.
According to the U.S. Environmental Protection Agency, the Florida peninsula warmed more than one degree during the last century, the sea is rising about one inch every decade and heavy rainstorms are becoming more severe. Temperatures are expected to rise further, exacerbating storm damages.
“Early weather forecasts predict a devastating hurricane season, which would cause further rate increases in 2025,” said Insurify’s recent report.
Florida isn’t the only state where severe weather impacts insurance rates. Louisiana is often hit by hurricanes and has the second highest rates. By the end of this year, projected rates in the state are expected to increase by 23% to nearly $8,000, per Insurify.
“Storms don’t need to make national headlines to wreak havoc on a home,” said Dr. Ian Giammanco, managing director of standards and data analytics for the Insurance Institute for Business & Home Safety (IBHS), as quoted in Insurify’s report.
Additionally, “the effects of climate change are catching up to states with historically lower-than-average rates, like Maine,” where insurance rates are expected to increase by 19% to $1,571 this year, said the report. “The Maine Climate Council projects a 1.5-foot relative sea level rise (SLR) by 2050. Coastal storm impacts will increase 10 times in frequency with just one foot of SLR.”
For some parts of the country, flooding is the main climate-change related insurance issue. For others, it’s wildfires. According to the National Oceanic and Atmospheric Administration, climate change, increased heat, extended drought, and a “thirsty atmosphere,” have been driving an increased risk of wildfires in the Western U.S. during recent decades.
“Wildfires are a growing concern, especially in Texas and the Western United States,” said Insurify. “Damage from wildfires costs the U.S. an estimated $147.5 billion annually, according to a 2023 congressional report.”
While these climate change-related risks are driving up insurance rates, 60% of Americans said they don’t believe climate change has impacted the value of their homes. However, younger generations are more likely to list climate change as a concern.
“As more Gen Z homebuyers enter the housing market, areas with high climate resiliency may become more desirable than states more affected by climate change,” said Insurify.
There are some things homeowners can do to mitigate the risks of weather-related damage. Insurify recommended checking flood and wildfire zone maps from FEMA and the National Weather Service.
“In wildfire zones, installing home-hardening features can mitigate wildfire damage,” said the report. “Dual-pane windows with a tempered glass layer can withstand fire-induced breakage, and non-flammable sidings like stucco or fiber cement reduce damage.”
For areas prone to hurricanes, it said “approved impact windows or hurricane shutters can protect against flying debris,” and that some insurers offer discounts for upgrades.
“As climate catastrophes affect more of the U.S., homeowners could have fewer insurance options in the future,” the report warned. It also said that, without the financial backing of reinsurance, more insurers may even leave wildfire-prone states.