In recent times, the United States has faced a series of severe climate disasters, prompting experts to warn of an impending homeowner’s insurance crisis. Insurance companies have dropped hundreds of thousands of customers living in areas prone to hurricanes and wildfires, and many smaller insurers have collapsed following major disasters. This situation has led some to predict a broader market failure in disaster-prone states, or even a potential housing market collapse.
While this has not yet materialized, insurance costs have significantly increased and show no signs of abating. A recent report from Insurify, an insurance price comparison firm, revealed that the average homeowner’s insurance bill in the U.S. rose by 12 percent last year to $2,948 annually, and is expected to rise another 4 percent this year. This increase outpaces overall inflation during the same period. (These figures exclude flood insurance, which typically requires a separate policy backed by the federal government.)
Several factors contribute to these rising insurance costs: the value of homes, the cost of materials for rebuilding, and even homeowners’ credit scores are considered by insurance companies. However, the primary drivers are the escalating impact of extreme weather due to climate change and the construction of millions of new homes in vulnerable areas. Insured losses from natural disasters in the U.S. averaged $100 billion annually between 2023 and 2025, compared to an average of about $15 billion annually a decade earlier, according to the Insurance Information Institute.
Change in average annual premium
“When you have these big catastrophes, it’s not just that insurers have to pay out a lot of plans, it’s that they’re all happening fast,” said Matt Brannon, the senior economic analyst at Insurify and the author of the new report. “It creates extreme financial risk for insurers, and they tend to respond to this risk by raising their rates.”
Although prices are rising in nearly every state, Brannon notes that the steepest increases are concentrated in particular areas. Here, we explore some of these regions, examining how climate change and extreme weather have driven rate hikes in recent years and identifying which areas might be next.
California
Past: 16% rise since 2023
Projected: 16% rise by the end of 2026
California is putting all efforts into tackling its insurance crisis, yet the state government struggles to make significant progress. Insurance rates have increased by 16 percent over the past two years and are projected to rise by another 16 percent this year, according to Insurify.
The state’s insurance market has been in turmoil since the catastrophic wildfires of 2017 and 2018, which led major insurers like State Farm to drop numerous customers in mountainous areas and even exit the state. Regulators have enticed insurers back by permitting the use of forward-looking “catastrophe models” that incorporate future climate data and allowing them to pass more costs onto customers. In return, insurers agreed to stop dropping customers in fire-prone hillsides.
The key solution is to fortify homes against wildfires by installing ember-resistant roofs and windows and removing vegetation to create “defensible space” around properties. Ahead of a crucial election for insurance commissioner this year, legislators have proposed bills to establish new fire resilience grant programs and enhance coverage discounts for homeowners who retrofit their properties. It remains uncertain if these measures will curb rising prices.
Georgia
Past: 24% rise since 2023
Projected: 10% rise by the end of 2026
Hurricane Helene ranks among the deadliest and costliest hurricanes to hit Georgia, claiming 37 lives, damaging tens of thousands of homes and buildings, and inflicting a $5.5 million loss on the state’s agriculture and forestry sectors. These losses are fueling a second consecutive year of home insurance rate hikes in Georgia, where Insurify forecasts a 10 percent premium increase in 2026 following a 9 percent rise in 2025. The impact is spread over several years due to local regulations that hinder rapid rate increases, according to Brannon. In contrast, neighboring Florida experienced an 18 percent jump in 2025 as insurers quickly responded to Helene’s heavy losses, but it anticipates more moderate increases this year.
Georgia’s ongoing pattern involves insurers consistently collecting less in premiums than they pay out in claims, a metric known as the combined ratio. In 2024, Georgia ranked third in the U.S. by this measure, underperforming the national average for much of the previous decade. This indicates that while Georgia’s rates are lower than many other states, they are artificially low compared to the actual risks.
Georgia’s lagging insurance rates now face a sharp increase in damage and risk from hurricanes. Although the state’s coastline is relatively short—only about 100 miles—Georgia has endured repeated hurricane impacts over the past decade. Climate change is also extending these impacts further inland. Hurricanes and tropical storms usually weaken and dissipate over land, but warmer Gulf of Mexico temperatures are strengthening storms as they make landfall, enabling them to remain powerful and damaging as they traverse inland Georgia.
Joe Raedle / Getty Images
Illinois
Past: 48% rise since 2023
Projected: 5% rise by the end of 2026
Illinois may be free from the wildfires and hurricanes that have disrupted coastal insurance markets, but it has not escaped soaring insurance premiums. Between 2021 and 2024, home insurance costs in Illinois increased by approximately 50 percent, adding nearly $1,000 annually to homeowners’ expenses, according to a Consumer Federation of America report.
State Farm, the nation’s largest home insurer, announced plans to raise homeowner insurance rates by over 27 percent statewide last summer. Allstate, the second-largest home insurer, also filed for an average 9 percent increase for more than 200,000 Illinois policyholders. Both companies attributed rising costs to extreme weather—in 2024, Illinois reported more hail damage than any state except Texas, according to State Farm.
Last month, during his budget proposal to Illinois legislators, Governor JB Pritzker criticized the continuous homeowner insurance rate hikes, describing the escalating costs as “nothing short of a crisis.” Illinois remains the only state without legislation prohibiting excessive rates. Legislators failed to pass a bill to limit price hikes last fall, but Pritzker continues to press the General Assembly to revive it. Meanwhile, insurance premiums may keep rising, with Insurify forecasting another 5 percent increase this year.
Michigan
Past: 36% rise since 2023
Projected: 3% rise by the end of 2026
Michigan has experienced a nearly 36 percent increase in insurance prices over the past two years, driven by insurance companies absorbing losses from other regions and a rise in severe weather events like thunderstorms, ice storms, flooding, and hail. Michigan is encountering more of these “secondary perils” that often result in numerous low- to mid-range claims. Since 2011, the state has faced at least one severe storm each year where losses exceeded $1 billion, according to the National Oceanic and Atmospheric Administration. In 2024, five such storms occurred.
Despite recent price hikes, Insurify notes that Michigan still has some of the lowest average premiums in the Midwest. Prices in 2026 are expected to stabilize slightly after two years of increases, with a projected rise of 3 percent. These fluctuations, particularly in the Midwest, result from companies determining how to price changing risks, according to insurance experts. “They’re trying to adjust their pricing to cover the potential costs,” said Andy Hoffman, a professor of sustainable enterprise at the University of Michigan. “They may raise their rates. They don’t have the payouts. They have to adjust them back.”
Nebraska
Past: 20% rise since 2023
Projected: 13% rise by the end of 2026
Over the past decade, Nebraska has seen some of the country’s steepest increases in home insurance premiums, according to Eric Hunt, assistant extension educator of agricultural meteorology and climate resilience at the University of Nebraska Extension. Premiums rose 25 percent on average over the past year alone, according to Insurify data.
Nebraska currently allows companies to set premiums based on market rates, rather than subject to state approval or caps. This system is one reason insurance has become so expensive.
The rise in rates also correlates with the state’s severe storms, which bring damage from increased hail and high winds. For example, the city of Lincoln experienced severe hail in May 2016, and multiple damaging windstorms have struck both Lincoln and Omaha over the last five years. As the climate continues to change, Nebraska could face more of these severe storms, along with potentially more heavy rain events that can cause flash flooding.
Another emerging risk is that Nebraska is receiving less snow than in the past, worsening the state’s wildfire season. Paired with more days of high wind gusts, “I think, especially in the western part of the state, you’re going to see smaller towns become more vulnerable to those fires,” Hunt said.
As insurance rates gain more attention from state politicians, Hunt anticipates more efforts to regulate increases in Nebraska.
North Carolina
Past: 14% rise since 2023
Projected: 5% rise by the end of 2026
North Carolina has experienced interesting developments concerning insurance premiums. Last year, the state’s rate bureau requested a 42 percent rate increase, citing increased risky development in hurricane-prone coastal areas and billions in storm damage from Hurricane Helene. However, the state insurance commissioner approved only a 7.5 percent increase. Now, Insurify projects a 5 percent increase in North Carolina’s insurance premiums for 2026. Compared to other high climate-risk states, this increase seems modest—but there’s more to the story.
Much of the damage North Carolina homeowners have faced in recent years stems from flooding caused by extreme, multi-billion-dollar storms like Helene in Western North Carolina and Florence in the coastal region. However, flood damage is not covered by homeowners’ insurance.
Other storm damage, like wind-related tree damage, is coverable in certain cases but is proving problematic. “In North Carolina and in higher-risk coastal states, insurers are not providing coverage, like in your base home policy plan, for things like high wind damage,” said Jayson O’Neill, a spokesperson for Unlocking America’s Future, which recently published a report on North Carolina’s insurance trends. A quarter of homeowners’ insurance claims after Helene were closed without payment last year. Additionally, some insurance companies are abandoning the state or risk-prone areas entirely. Nationwide, for instance, dropped 10,000 customers in hurricane-prone zip codes of coastal North Carolina in 2024. O’Neill believes these denials help keep rate increases moderate—albeit at an upfront cost to homeowners.
Finally, a “consent to rate” loophole in the state allows companies to directly ask homeowners to approve monthly increases, opening the door to future increases for individual households.
It’s a delicate balance, according to Mike Causey, the state’s Commissioner of Insurance. “You can’t run the companies out of business, or we’d all be in trouble,” Causey said. “So, we’ve been trying to keep the increase as close to zero as possible.”
There is no simple solution to this problem, regardless of the disasters a state faces. State regulators cannot merely refuse permission for insurance companies to raise prices, as this could lead companies to drop customers or exit the market, as seen in California. Many states offer their own “public option,” such as Florida Citizens and the California FAIR Plan, but these backstops often provide less comprehensive coverage and are more expensive than the private market. Such options can also draw funds from a state’s tax base, raising a fairness issue—why should every taxpayer fund insurance for residents in the most expensive and disaster-prone homes?
Projected average annual premium, 2026
The only real solution to rising prices—beyond slowing climate change itself—is to reduce the amount of property at risk from natural disasters. This involves renovating, rebuilding, or relocating millions of properties across numerous states until major disasters no longer cause billions in damages. The cost of disasters like flooding has decreased over the last century compared to the value of property exposed to those disasters, suggesting some adaptation has occurred, but more rapid progress is needed.
A recent report from the Natural Resources Defense Council warned that the U.S. might become “an uninsurable country” without action, and Democratic Senator Sheldon Whitehouse cautioned that the insurance collapse could trigger a “2008 or worse” recession.
The question is who should bear these costs. Most homeowners lack the thousands needed for new roofs and walls, and states lack billions for retrofits. Developers often resist building codes mandating sturdier homes, and insurance companies are reluctant to pay for customer upgrades, as they might lose customers to other providers, negating any cost savings.
Brandon Bell / Getty Images
The solution may involve a combination of strategies. Another recent report from the Natural Resources Defense Council suggests states should impose surcharges on insurers and use the funds for roof upgrades and vegetation clearance, targeting the most vulnerable homes driving claims. North Carolina and Alabama have implemented such programs. Lawmakers could also upgrade building codes for new homes, imposing costs on developers, as Florida did after Hurricane Andrew in 1992. Meanwhile, Colorado’s legislature has considered establishing a state-run “reinsurance” program to provide financial support for smaller insurers and reduce their costs.
Until we lower the risk profile of the nation’s homes, price increases are likely to persist, according to Carolyn Kousky, an expert on disaster insurance who leads the Insurance For Good project, advocating for equitable disaster insurance frameworks.
“We see in the hotspots of climate risk that the premiums have even outpaced [other costs],” she said. “Until we actually focus much more heavily on loss reduction and climate adaptation, that will continue to be a challenge.”
