As climate change continues to wreak havoc on U.S. cities—from Los Angeles to Cedar Rapids, Iowa, and down the hurricane-prone Southeast coast—few communities haven’t felt the compounding effects of destructive storms or devastating drought. For many residents, the correlation between extreme weather events and homeowners insurance prices is becoming more pronounced: Last week, the New York Times published an interactive story, wherein readers can find out if insurance companies in their state have seen profit losses over the past 10 years. Homeowners insurance, the Times concludes, is increasingly unprofitable in 18 states; as such companies become less profitable, the risks are passed onto homeowners and affect the affordability of communities at large.

Homeowners insurance is more expensive than ever: A 2023 Policygenius report states that between May 2022 and 2023, rates increased by an average of 21 percent nationwide. As a result, according to a recent report from the Washington Post, some homeowners are foregoing homeowner’s insurance entirely, opting to pay off their mortgages early in favor of assuming the risk of catastrophic losses. Citing a Consumer Federation of America (CFA) study, the Post states that 14 percent of those who paid off their mortgage are uninsured. “Experts say this trend is driven by the escalating threat of climate change—which has forced insurers to make larger and larger payouts—and skyrocketing housing prices,” reads the story.

Some insurers are abandoning states entirely or not renewing policies in certain cities, leaving homeowners with few, expensive options. Last year, Farmers Insurance announced it would no longer issue new policies to homeowners in Florida, “to manage its risk exposure in the hurricane-prone state,” according to CNN. Local affiliates in the state have reported that, for many families, insurance premiums have doubled, noting that sky-high rates are causing some families to move away.

These changes present new risks to homeowners, especially those who are low-income and people of color. A 2024 report from Freddie Mac shows that homeowners insurance consumed more income for very low-income borrowers. The CFA report states that homeowners making less than $50K per year are twice as likely to be uninsured, and an estimated 22 percent of Native American, 14 percent of Hispanic, and 11 percent of Black homeowners have no homeowners insurance.

But rate hikes and evaporating policies also have a broader impact on homeownership. According to the National Association of Realtors, these conditions put pressure on developers that are hesitant to build new housing—including affordable housing—in areas where insurers are weary. “Skyrocketing insurance rates threaten to reduce the amount of affordable housing stock by rendering older units uninsurable and stalling or even canceling projects in developer pipelines,” reads a March Shelterforce story.

Top photo of damaged property after Hurricane Ian in Fort Myers Beach, Florida, by Jeffrey Greenberg/Universal Images Group via Getty Images

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