Paying a High Premium: How Climate Change Is Crippling Homeowner's Insurance and Fueling a Housing Crisis

Alla Semenova

Economics Working Paper Archive from Levy Economics Institute

Abstract: This paper examines the growing impacts of climate change in the US homeowner's insurance industry. As climate change-driven weather extremes and natural disasters have accelerated in their frequency and severity, they have inflicted increasingly more residential property damage and destruction, leading to surging losses and claims payouts for the US homeowner's insurance industry. Faced with worsening underwriting performance, the US home insurers have responded with higher homeowner's insurance premiums, reduced home insurance coverage, policy non-renewals, exits from high-risk geographic areas, and other changes to their business practices. Such climate-driven actions by home insurers have led to a crisis of homeowner's insurance affordability, availability, and protection. This crisis further undermines homeownership affordability, eroding homeowner finances, and threatening the stability of the US financial system. By focusing on the US homeowner's insurance industry, this paper provides a case study on the growing economic costs and impacts of climate change.

Keywords: climate change; extreme weather; homeowner’s insurance; home ownership affordability; homeowner finances; financial stability; federal policy (search for similar items in EconPapers)
JEL-codes: D14 E31 E44 G01 G21 G22 G28 G51 G52 Q54 R31 (search for similar items in EconPapers)
Date: 2026-05
New Economics Papers: this item is included in nep-agr, nep-hre and nep-pke
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