As the planet heats, insurance premiums rise

Last November, two Washington residents filed a lawsuit accusing petroleum corporations of misleading the public for decades about fossil fuels’ effect on climate change and how global warming is harming the planet and its inhabitants. Their lawsuit marks the latest addition to the growing number targeting Big Oil.

The case, however, was novel, given the plaintiffs’ damage claims: That increased carbon emissions from fossil fuel burning have intensified extreme weather events, such as hurricanes, wildfires, floods and heat waves, and thereby led to rising insurance premiums and “precipitated a homeowners’ insurance crisis.” 

The number of climate-related disasters has surged in recent years and caused billions of dollars’ worth of damage, undeniably triggering a spike in insurance. This has eaten into insurance companies’ profits, prompting them to raise their premiums at a much higher rate than inflation — especially in disaster-prone areas. Many insurers are simply abandoning homeowners in areas with a high wildfire risk by canceling or refusing to renew their policies.

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This has effectively increased housing costs in places that were already facing an affordability crunch, hitting lower-income families the hardest. And the housing market could be further hampered as insurance becomes prohibitively expensive or impossible to obtain. On the other hand, however, higher premiums in higher-risk areas could discourage building in, say, the wildland-urban interface.  

It will be up to the courts to decide whether to hold Big Oil accountable, but the data makes it clear that as the planet heats up, so do insurance costs. “One thing is certain: Unless the United States and the world rapidly transition to clean energy, climate-related extreme weather events will become both more frequent and more violent, resulting in ever-scarcer insurance and ever-higher premiums,” according to a 2024 Senate Budget Committee report. “Climate change is no longer just an environmental problem. It is a looming economic threat.”   

$114 billion; $80 billion 
Amount of damage caused by climate-related disasters between 2018 and 2022 and the portion of that damage that was insured. Early last year, a Treasury Department analysis of climate change’s effects on the homeowners insurance market found that the number of disaster declarations for climate-related incidents during that five-year period was double the national 50-year average.

8.7% 
Amount by which average homeowners insurance premiums rose faster than inflation nationwide during the 2018-2022 period. Residents of disaster-prone areas saw much larger increases — assuming they still had insurance.

16,251; 2,046
Number of homes destroyed and damaged respectively by the Los Angeles-area Eaton and Palisades fires in January 2025.

72,000
Number of homeowners, rental dwelling, commercial apartment and other property insurance policies canceled by State Farm in California due to “catastrophe exposure” in 2024. Carriers have canceled a total of nearly 400,000 policies in the state since 2021. 

$40 billion
Estimated insured losses from the Eaton and Palisades fires — four times the cost of the 2018 Butte Camp Fire, which caused $10 billion in insured losses. 

13,500; $5 billion
Number and value of claims State Farm reported paying out related to the Eaton and Palisades fires, prompting it to ask state insurance regulators for an emergency 22% rate hike.

$36 billion; $220 million 
Combined profits and CEO compensation respectively for 22 publicly traded insurance companies in 2024. 

Illustrations by Steph Littlebird/High Country News.

SOURCES: Policygenius, Climate Power, First Street, U.S. Department of the Treasury’s Federal Insurance Office, Equitable & Just Insurance Initiative, U.S. Senate Budget Committee, Insurify, ZestyAI.

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This article appeared in the February 2026 print edition of the magazine with the headline “As a planet heats, insurance premiums rise.”