The insurance crisis in the United States is worsening, with climate change playing a significant role in driving up premiums and causing insurers to abandon high-risk areas. This has left many homeowners struggling to afford coverage for their properties.
Diana Hill, an 84-year-old resident of Wilmington, N.C., testified before the Senate Committee on Environment and Public Works, stating that she pays nearly a month’s worth of Social Security benefits just to insure her property. Hill noted that North Carolina suffered heavily from Hurricane Florence in 2018 and Hurricane Helene in 2024, with Florence dumping over 30 inches of rain in Wilmington. Insurance companies have responded to these disasters by passing on the costs to policyholders, Hill claimed.
“It’s almost like we’re on a pay-as-you-go plan,” Hill said. “We old timers paid when there was very little threat to insurance companies’ bottom line, and now we’re paying even more. Many of us seniors, if not hurting … are struggling to keep up with the cost of protecting our homes.”
The situation is particularly dire in states like Florida and California, where many insurance companies are no longer offering coverage in high-risk areas or are providing bare-bones policies that do not cover much. Citizens Property Insurance Corp., Florida’s insurer of last resort, has seen its policy count drop from 1.41 million in October 2023 to 812,500, as 13 new companies have entered the market and existing carriers request rate decreases.
In California, Insurance Commissioner Ricardo Lara approved a 17% emergency rate hike for State Farm following January wildfires that ravaged two Los Angeles County communities. The rate hike could total $749 million, according to Carmen Balber, executive director of Consumer Watchdog.
Philip Mulder, an assistant professor at the University of Wisconsin, shared research showing that the average homeowner’s premium increased by 48% between 2020 and 2024, based on data from 84 million mortgage escrow payments. Mulder found a clear connection between disaster risk and rising premiums, with inflation-adjusted premiums increasing by more than 40% in areas most exposed to wildfires and hurricanes.
The insurance issue is closely tied to climate change, according to Sen. Sheldon Whitehouse, who led the hearing. A board member of the world’s largest insurance company reportedly stated that the insurance business model cannot survive without addressing climate change. Whitehouse criticized Republican colleagues for accepting support from gas and oil special interests rather than addressing climate change.
Josh Levy, mayor of Hollywood, Fla., testified that windstorm property insurance in his city has more than doubled in five years. Levy painted a grim picture of the Florida insurance market, stating that many homeowners are being forced into Citizens Property Insurance Corp. and that the market remains unstable despite claims of reforms.
The crisis has significant implications for the U.S. economy, with rising insurance costs potentially depressing property values and affecting mortgage affordability. As Whitehouse noted, if insurance premiums triple or quadruple over the life of a mortgage, the carrying cost could become unsustainable for many homeowners.
