A Premium Crisis: Climate Change Threatens Homeowner's Insurance, Housing, and Financial Stability

Alla Semenova

Economics Policy Note Archive from Levy Economics Institute

Abstract: Climate change is rapidly destabilizing the US homeowner's insurance system, creating major challenges for policymakers concerned with housing affordability and financial stability. Hurricanes, floods, wildfires, tornadoes, severe hail, and other climate disasters are wreaking havoc on US residential properties, causing billions of dollars in damages, burdening both homeowners and home insurers. As extreme weather events and natural disasters grow in frequency and severity, residential property losses are surging, insurance claims payouts are soaring, and home insurer financial performance is weakening (First Street 2025; Woleben 2024). As climate risks and uncertainty mount, homeowner's insurance premiums are spiking, home insurance protection is vanishing, and coverage availability is dwindling. The United States is now facing a major climate-driven crisis of homeowner's insurance affordability, availability, and protection. This crisis is eroding homeowner financial security, undermining homeownership affordability, fueling a housing emergency, and threatening national financial stability.

Date: 2026-04
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