• The struggle to get and keep home insurance has been plaguing areas prone to floods and wildfires.
• Severe thunderstorms are also hiking home insurance premiums across the Great Plains and Midwest.
• Most Americans can't get a mortgage without home insurance.

Homeowners who live far from California wildfires and coastal flooding are experiencing some of the largest spikes in insurance premiums.

While the average cost of home insurance is rising in nearly every ZIP code across America, new research shows that the biggest percentage increases between 2021 and 2024 were in Utah, Illinois, Arizona, Pennsylvania, and Nebraska.

"Premiums have been rising faster in Heartland states than coastal states," Douglas Heller, director of insurance at the Consumer Federation of America and coauthor of the research, told Business Insider.

The findings show that the home insurance affordability crisis extends far beyond Gulf Coast states prone to hurricanes and flooding or California towns vulnerable to wildfires — which often make the headlines. Extreme thunderstorms with wind, rain, and hail are also causing billions of dollars in losses in states between the slopes of the Rocky and Appalachian mountains.

The disasters, combined with inflation and the rising costs of rebuilding homes, are driving up premiums and forcing some insurance companies to scale back coverage in risky areas or drop customers altogether. The consequences could be significant because most Americans can't get a mortgage without home insurance, and areas deemed too risky to cover could see property values drop.

"This insurance crisis is not a coastal crisis," Heller said. "It's not a Republican or Democratic state crisis. It's touching every corner of the country. These dramatic rate hikes are making this critical tool of financial security inaccessible because it's too costly."

Why home insurance premiums are rising so quickly in many states

The Consumer Federation of America found that between 2021 and 2024, average home insurance premiums in Utah jumped 59% to nearly $1,800 a year. In Arizona, they rose 48% to more than $2,200 while Illinois saw a 50% spike to nearly $2,950. In Pennsylvania, average premiums rose 44% to nearly $2,000, and in Nebraska, they rose 35% to $5,127.

Florida has the highest premium in absolute dollars, averaging nearly $9,500 in 2024, but its average rates rose by a smaller percentage compared to some other parts of the country.

J.P. Morgan published a report on March 31 that similarly found states, including Colorado, Utah, Nebraska, Iowa, Minnesota, and Illinois, experienced the largest percentage increases in home insurance costs between 2019 and 2024.

Deadly thunderstorms with high-speed winds, rain, hail, and tornadoes — what scientists call "severe convective storms" — have ripped across a wide swath of the Midwest and the South this year. In 2020, thunderstorms caused more than $11 billion in damage after tearing through states including South Dakota, Nebraska, Illinois, and Indiana, according to a federal tally.

"In the last few years, those big losses happening in the Heartland are from severe convective storms, and those are the ones that are driving premium increases," Sarah Kapnick, global head of climate advisory at J.P Morgan who authorized its report, said.

Climate scientists have long warned that wildfires, drought, and hurricanes are becoming more frequent and destructive as the planet warms mostly due to carbon emissions from fossil fuels.

Kapnick said it's more challenging to determine the climate connection to the convective storms and future risks because they are more local. Climate models often don't capture weather events on such a granular scale.

Scientific research is starting to get stronger. Kapnick cited a study suggesting hailstones will get bigger due to climate change. However, research stops short of connecting historical changes in tornadoes to a warming world.

Kapnick said insurance premiums are also rising fast in Heartland states because their markets are less regulated compared to places like California, which limits how much insurers can hike rates. National insurers can pool risk across states and raise premiums in place with fewer cost restrictions.

The home insurance crisis is expected to worsen

Still, Heller said it's hard to capture the full causes and scale of the home insurance crisis because there isn't much publicly available data.

The average annual premiums in his report don't reflect what customers actually paid. His group purchased "test quotes" from Quadrant Information Services, which maintains an up-to-date database of rates and pricing algorithms from most of the nation's major insurance companies.

These test quotes are created by plugging a typical homeowner into pricing algorithms that insurance companies filed with state regulators between December 2021 and August 2024. Heller said all quotes in his report were based on a consumer with a mid-tier credit score and a home with a $350,000 replacement value.

The Treasury Department and the National Association of Insurance Commissioners in January published an analysis of 246 million insurance policies sold between 2018 through 2022 — the most comprehensive look to date. They found that homeowners who live in areas with the highest expected losses from climate-related disasters paid 82% more for insurance than those in areas with the lowest expected losses. Nonrenewal rates were also higher in the riskiest areas and insurance claims are frequent in regions affected by wildfires and severe convective storms.

But it's unclear whether that data collection will continue, Heller said. Meanwhile, the home insurance affordability crisis will likely get worse as the planet warms. Since 2013, the United States has recorded 178 billion-dollar disasters, five times the amount recorded in the 1980s. The rising disaster risks led some insurers to stop selling policies in parts of Florida and California, which will only get worse after wildfires decimated communities in Los Angeles in January.

The Treasury Department and NAIC didn't respond to a request for comment.

Kapnick said insurance companies and policymakers need to find ways to ensure properties are more resilient to extreme weather to reduce damages.

"One of the easiest indicators of expected loss is, how old is your roof? When was it last replaced?"

Kapnick said insurers could offer homeowners discounts if they invest in resilience and states can also fund such projects.

Do you have a story to share about home insurance? Contact this reporter at [email protected].

• Rebuilding what's been destroyed by a wildfire is supremely challenging, victims said.
• Efforts have been hindered by underinsurance, permitting delays, and the rising costs of materials.
• Fire victims also struggle with the emotional toll of losing their homes and fear of future disasters.

When Bill and Leslie Bixley lost their Malibu home of 20 years to a wildfire, they knew they would rebuild. But they didn't know they'd face years of red tape and heartache.

"The initial shock of losing material possessions is rough," said Bill, a retired teacher. "But the roughest part was getting the permits and getting through the bureaucracy."

BI talked with four homeowners who lost their houses to the 2018 Woolsey fire in LA and Ventura Counties about what it's been like to piece their homes back together — and whether it was worth doing.

Two families told BI that if they'd known how challenging the rebuilding process would be, they might have walked away years ago. But two others said they're glad they held onto their properties and rebuilt the lives they had there. They all said that rebuilding was much more challenging than they'd hoped.

"I don't know if there's anybody I've talked to who lost their place and went through any of this that it didn't completely change their life and traumatize them in some way," Bill Bixley said.

Struggling with underinsurance

Fortunately, all four families who lost their houses had home insurance. But some of them discovered after the fire that their insurance policies wouldn't cover the full cost of rebuilding — or of the personal belongings they lost.

William Buckley, a Malibu native who works in financial services, said he had a good experience with his provider — AAA home insurance — after the fire. It was quick to send him his initial payouts and responsive to his requests.

"We were never left in the lurch," Buckley said. "We were never left holding an invoice and waiting for money."

But Buckley quickly learned that he was underinsured. While he ultimately received about $1.1 million in insurance payouts, he said, he spent about $1.6 million, he said. He took out a FEMA disaster relief loan and got much-needed cash from Southern California Edison's $2.2 billion legal settlement. But he and his wife still depleted their savings to cover the rest of the costs. They weren't alone. "Every one of my neighbors I knew was underinsured," Buckley said.

Richard Gibbs, a film and TV composer and owner of Woodshed Recording studio, had a much less positive experience with his home insurance provider, State Farm. Gibbs struggled to get the company to cover rent on the temporary home he and his family wanted to live in. When Gibbs realized that he'd lost all of his original scores, which an appraiser valued at $2.1 million, State Farm refused to reimburse more than $5,000 for them, Gibbs said.

The problem of underinsurance is widespread: A study published last year of wildfire-related insurance claims in Colorado found that nearly three-quarters of those affected by the Marshall Fire of 2021 weren't fully covered by their policies. Rebuilding a home in the future — and replacing everything in it — often costs much more than its current value, as estimated by an insurance company. Policies that cover the cash value of a home rather than the full cost of replacing it often leave homeowners without enough funds to rebuild. Gibbs and his wife ended up suing State Farm for allegedly underpaying and delaying their claims. They settled for an amount Gibbs said he couldn't disclose.

When Gibbs talks to other homeowners worried about a potential future wildfire, he tells them all one thing: "Make sure that your insurance policy truly covers your house in case it burns down because most do not," he said.

State Farm didn't immediately respond to a request for comment.

An endless permitting process

Some fire victims struggled with city and other government permitting processes to rebuild, despite local authorities' promises to fast-track them.

Jon Krawczyk, a metal sculptor who also lost his home in Malibu, said authorities required him to rebuild the same structures he had before, even though he wanted one building instead of three and less square footage.

"There was no wisdom," Krawczyk said of the permitting process, adding that local authorities weren't flexible with the rules, even when his plans would've resulted in less construction.

Ballooning construction costs

Many fire victims said the cost of construction was ultimately much higher than they'd expected. Some homeowners were in the middle of the rebuilding process when COVID-19 hit, and demand for housing, construction materials, and labor soared. The pandemic also snarled building material supply chains, sending prices even higher.

Buckley and his family moved into their new home in June 2021, even as they continued construction on it. "It was just a structure in a rubble field, basically," he said. The home and landscaping were completed at the end of 2023, almost exactly five years after the fire.

As Gibbs hopes to finally break ground on his new home this year, he's bracing for increased competition for building materials and labor, given that many victims of the Palisades and Eaton fires will likely also want to start rebuilding as quickly as possible.

Moving on — or away

Despite designing their new homes to be far more resistant to future fires, some who've rebuilt live in fear of the next major disaster. Many are also struggling with the lasting emotional toll of losing their homes.

The devastating LA wildfires this winter, which also destroyed homes in Malibu, have exacerbated that fear. It's not just neighborhoods nestled into the hills or near the urban-wildland interface that can feel vulnerable these days.

"You could be in the middle of LA, and a fire can sweep through the neighborhood with the kind of winds we have," Buckley said.

The Bixleys were so traumatized by their experience — and fearful of future fires, that they moved out of Malibu and leased their home to victims of the most recent LA fires. They're living in a rental home in Fresno as they decide what to do next.

"This last fire was so horrific, and we've just been so stressed out and traumatized from the experience, even though we've done everything in our power to fireproof our house," Leslie said. "We went through all that heartache, but it still didn't take away the pain and the fear of this happening."

Many of the Bixley's neighbors never rebuilt their homes, so their neighborhood still "looks like somebody who's lost half their teeth," Bill said. The couple said they know many others who also fear future fires and want to leave Malibu.

Gibbs said he's also considered leaving LA County because of "the insanity of the costs and insurance" made worse by the recent fires.

Buckley said that, for a long time, it was hard for him to talk with anyone who hadn't lost their home to a fire about the experience. He felt he'd joined a "club" of fire victims.

"At first, you don't even want to communicate with your old club, you're in this different club now," Buckley said. "They don't understand the extent of the trauma. It's hard to communicate that to anybody."

Have you been affected by a wildfire or other natural disaster? Contact this reporter at [email protected].

• Chris Gates left Miami Beach for Santa Fe due to climate concerns and cost savings.
• Florida's flood risks and rising insurance costs made Gates worry about retiring there.
• Gates saves $1,000 monthly in New Mexico in HOA fees and home insurance.

After living in Miami Beach for two decades, Chris Gates was fed up.

The 61-year-old pharmacist had met with city officials and sent letters advocating for Miami to invest more in climate solutions, only to watch Florida Gov. Ron DeSantis roll back state climate actions and scrub any mention of climate from many laws.

"I saw the writing on the wall," Gates told Business Insider. "I'm five years away from planned retirement, and I was worried about the cost of living and my quality of life. I've been through flooding in South Beach and still see people posting pictures of the same problems."

Gates said he considers himself a "climate mover" in deciding to relocate to Santa Fe, New Mexico in 2023. Florida's vulnerability to the climate crisis, combined with rising costs of living and being closer to his mom and brother, were the main reasons he left Miami Beach. Now Gates is saving about $1,000 a month on home insurance and HOA fees, according to documents shared with BI. He also feels safer knowing that New Mexico has a statewide climate plan.

Gates joins many older Americans who've moved in search of a lower cost of living for retirement, but is rare in that he left Florida — which still has a fast-growing population. While there's little data indicating climate risks like hurricanes and wildfires are directly causing massive migration, Gates's story suggests it may become more of a factor.

Saving $1,000 a month

Gates sold his condo at a luxury building in South Beach for $710,000 in December 2022, according to documents reviewed by BI, earning him about $415,000 in net profit. That year, his HOA fees were nearly $1,200 a month and covered amenities like a pool and gym. Condo insurance was about $190 a month.

He rented an apartment for a couple of years in Santa Fe before buying a $227,000 fixer-upper in February. The HOA fees are about $250 a month and insurance is $72. There aren't many perks, like a gym, pool, or management office, Gates said, but he has more peace of mind.

"If I were to stay in Florida until I'm 90, chances are a lot of bad stuff will happen," Gates said. "That's just my opinion and climate scientists agree. I'm not a millionaire, so I'm not gonna put all my eggs in one basket down there."

Rising risks and costs

While Miami is carrying out its own climate action strategy, Gates wanted faster progress on installing solar panels on government buildings and new infrastructure to protect properties from flooding as hurricanes become more destructive. The extreme weather, among other factors, is also making home insurance more expensive in Florida.

Miami's average elevation is six feet, and scientists predict sea levels will rise by the same amount by the end of the century. Sea levels in Miami already rose about six inches between 1986 and 2016. Meanwhile, the frequency of flooding from high tides has increased by over 400% in Miami Beach since 2006.

The city has been investing in a climate resiliency strategy, including raising roads and installing water pumps. In February, local commissioners also unveiled plans for more than $1 billion in anti-flooding water and sewer projects, which will be paid in part by hiking residents' utility rates every year through 2030, the Miami Herald reported. Residents said it would make the city less affordable at a time when rent, HOA fees, and insurance are all rising.

That cycle worried Gates, as well.

"Taxes and other bills will have to go up a lot to cover for these infrastructure projects," he said. "I don't want to be caught up in this cycle."

Gates acknowledged that New Mexico comes with its own risks, including wildfires. But he feels better knowing that there's a statewide plan to slash greenhouse gas emissions and adapt to extreme weather led by Gov. Michelle Lujan Grisham.

"Moving to New Mexico made me feel like I'm part of the solution rather than part of the problem," Gates said. "I know that every time I pay my electric bill, my utility is switching to renewables faster than many places in the country."

Have you moved for financial, lifestyle, or climate reasons? Contact this reporter at [email protected].

• There are a record number of properties for sale in Florida, with 168,717 homes listed in February.
• Some cities have doubled the amount of listings on the market since last year.
• The biggest increase in listings from last year occurred in areas with more affordable homes.

Florida's housing market is cooling as a record-setting number of homes were listed for sale in February.

According to Realtor.com, 168,717 properties went on the market in February, the highest number the site has recorded since it started keeping track in 2016.

The total number of properties for sale in Florida jumped by 40% since February 2024, Realtor.com found. In some cities, there are more than double the number of listings compared to last year. Only seven cities out of the 252 Realtor.com tracked had fewer listings this year than last.

Economists and other housing-market experts use increases in inventory to identify areas where demand and competition for houses might be waning. There, homebuyers might start to have an edge over home sellers. Increased inventory is also an indicator that home prices could fall.

Even though Palm Beach real estate is experiencing what some brokers call a "Trump bump," with expensive properties changing hands, other parts of the state are getting cheaper.

"Home shoppers in Bradenton and Sarasota are in for a treat with climbing inventory, falling prices, and longer time on market," Realtor.com senior economic research analyst Hannah Jones said in the report. "Buyers are likely to find more seller flexibility as homeowners aim to attract buyer attention."

Because the pandemic housing boom led to record-low levels of inventory nationwide, more homes for sale can sometimes signal a return to normal rather than a housing-market decline. In some parts of Florida, however, the influx of homes on the market and other forces are already having an effect on property values.

Take Greenacres, Florida, an enclave 10 miles southwest of West Palm Beach. In January 2025, the median listing price was $259,950, 13% less than in January 2024.

Other factors are weighing on the Florida housing market, including relatively higher mortgage rates that stifle homebuyer demand, intensifying property damage from natural disasters, and rising homeowners' association, or HOA, fees.

Here are 17 Florida cities with the biggest increases in homes for sale year-over-year, according to data from Realtor.com. Homebuyers and investors may want to eye these spots for better deals and more negotiating power.

The Realtor.com data about homes on the market is from February 2025, while the median listing prices are from January, the most recent month available.

17. The Villages

Properties on the market: 594

Increase in homes for sale year-over-year: 76.5%

Median listing price: $389,250

16. Oldsmar

Properties on the market: 144

Increase in homes for sale year-over-year: 76.7%

Median listing price: $379,450

15. Tequesta

Properties on the market: 111

Increase in homes for sale year-over-year: 76.8%

Median listing price: $749,000

14. Greenacres

Properties on the market: 331

Increase in homes for sale year-over-year: 78.9%

Median listing price: $259,950

13. Fort Myers Beach

Properties on the market: 508

Increase in homes for sale year-over-year: 83.1%

Median listing price: $799,999

12. St. Augustine

Properties on the market: 1,596

Increase in homes for sale year-over-year: 84.2%

Median listing price: $612,000

11. Tavares

Properties on the market: 152

Increase in homes for sale year-over-year: 92.40%

Median listing price: $359,000

10. Harmony

Properties on the market: 121

Increase in homes for sale year-over-year: 100.00%

Median listing price: $364,500

9. Royal Palm Beach

Properties on the market: 218

Increase in homes for sale year-over-year: 100.00%

Median listing price: $479,950

8. Ave Maria

Properties on the market: 218

Increase in homes for sale year-over-year: 106.60%

Median listing price: $474,900

7. St. Johns

Properties on the market: 269

Increase in homes for sale year-over-year: 115.70%

Median listing price: $575,000

6. St. James City

Properties on the market: 123

Increase in homes for sale year-over-year: 115.80%

Median listing price: $599,900

5. Dania Beach

Properties on the market: 168

Increase in homes for sale year-over-year: 118.20%

Median listing price: $409,900

4. Miami Gardens

Properties on the market: 309

Increase in homes for sale year-over-year: 120.70%

Median listing price: $499,999

3. Pace

Properties on the market: 178

Increase in homes for sale year-over-year: 128.20%

Median listing price: $349,000

2. Citrus Springs

Properties on the market: 298

Increase in homes for sale year-over-year: 136.50%

Median listing price: $284,990

1. St. Petersburg

Properties on the market: 2,141

Increase in homes for sale year-over-year: 164.1%

Median listing price: $440,000

Almost everything related to hail has gotten bigger over Said Ahmad's 18 years in the Denver roofing business. Denver is in the most hail-prone swath of the US, which includes Colorado, Nebraska, and Wyoming.

"We are getting storms right now every other year that we used to get, like, once every 10 years," he told Business Insider.

The damages to homes have gotten worse, too. Ahmad said he's regularly worked on homes that needed not only a new roof but also siding, windows, and gutters, a project that can easily cost $60,000.

"When I first got into the business, if you had a $10,000 claim, that was considered big. Now, all of them are almost at least that," Ahmad said.

The US insurance industry is experiencing a crisis as extreme weather events increase in severity and frequency. Since 2013, the United States has recorded 178 billion-dollar disasters, five times the amount recorded in the 1980s.

California wildfires and Florida hurricanes may grab headlines for good reason. Still, multiple experts tell Business Insider that hail is quietly becoming the biggest climate concern within the insurance industry, fueling a rise in premiums and scaled-back coverage.

"It's been eroding balance sheets for the last 10 years," Max McClure, chief insurance officer at insurance startup Steadily, which provides plans to landlords, told Business Insider.

Hail is causing a headache for insurers, leading to higher premiums

Part of the problem is that the insurance industry does not understand hail as well as other extreme weather events, McClure told BI.

With wildfires, for example, it's relatively straightforward for an insurance company to predict a home's risk by assessing the amount of brush near the house or its proximity to a high-risk hillside.

Hail, by comparison, is more of a mystery.

Insurance companies can't predict exactly where severe hail storms will fall or how big the stones might be. That uncertainty, combined with the escalating cost of payouts for previous hail storms, has made some companies raise homeowners' premiums.

"They don't really understand why or how to fix it, and so uncertainty makes it worse," McClure said of insurers.

As premiums rise, coverage is shrinking, putting a squeeze on many homeowners. In the past, insurance companies would be more likely to pay for the entire replacement of a roof, no matter how old it was. Now, it's more common for them to only cover the cash value of the roof or limit their coverage based on the roof's age, McClure said.

He added that homeowners in these areas should be scrutinizing their plans more than ever. "Make sure they understand how their roof is covered," McClure said.

Climate change is likely to make hailstones bigger

Climate change isn't helping the matter because it creates bigger hailstones, said Victor Gensini, an environmental professor at Northern Illinois University.

Hail forms when warm air on the ground during a storm creates an updraft, which pushes raindrops towards colder parts of the atmosphere, freezing them, and creating hailstones. Warmer air, therefore, leads to bigger stones.

"That warm, humid air basically serves as gasoline," Gensini said.

In recent years, storms in Alabama, Colorado, and Texas set new records for the largest hailstones in each state's history, all over 4 inches. A study Gensini and his colleagues published last year predicted a 15% to 75% increase in large hailstones — which measure around 1.5 inches — in the coming years.

The insurance industry's concern over the increasing intensity of storms has prompted a breakthrough moment for hail.

Gensini plans to unveil a center dedicated to studying hail by August. Anchored at Northern Illinois University and the University of Wisconsin-Madison, it would bring together 25 researchers and professors to form a "Shark Tank" for hail, with academics across environmental studies, statistics, computer sciences, and actuarial sciences pitching research projects to the insurance industry.

He said 12 insurance and reinsurance companies have signed up to support the center with funding.

The plan is that the participating researchers will embark on one-year projects to help the industry model worst-case scenarios for hail and correctly price premiums.

"It's up to us to try to figure out the answer," Gensini said.

• California's insurer of last resort will get a $1 billion bailout to cover LA wildfire damages.
• The bailout will likely lead to higher insurance premiums for California homeowners.
• This situation could escalate the state's insurance crisis and convince more insurers to leave.

Property owners across California will likely pay higher insurance premiums to help cover the damages of the Los Angeles wildfires after the state's insurance plan of last resort said it doesn't have enough funds to pay out its claims.

State regulators on Tuesday approved a $1 billion bailout of California's insurer of last resort, the FAIR Plan, which covers those who can't find insurance on the private market. The bailout will be funded by private insurers licensed to operate in the state — and under a new rule enacted last year, they can pass up to half of the cost on to their customers.

The FAIR Plan said it was set to run out of money by the end of March as losses piled up from the Palisades and Eaton fires. It would be the first time in 30 years that it had been unable to pay its claims.

The bailout comes after California's largest home insurer, State Farm, this month asked state regulators for emergency permission to raise homeowners' rates by an average of 22%, starting May 1, to avert a "dire situation" for the company's finances. As of February 3, State Farm had paid out $1 billion and said it expected to spend far more.

It's all part of a worsening home insurance crisis in California that was already underway before the LA blazes destroyed more than 12,000 buildings. Back-to-back fires in 2017 and 2018 decimated insurers' profits, prompting companies including State Farm, Allstate, and Farmers Insurance to either stop writing new policies, pull back coverage, or, in some cases, drop tens of thousands of property owners in the state. Insurers cited growing losses from wildfires and other disasters coupled with inflation and more expensive home repairs.

Most recently, beginning in July, State Farm dropped nearly 70% of its policyholders in the affluent Pacific Palisades neighborhood.

All of this has forced hundreds of thousands of homeowners into the FAIR plan, designed to be a backstop for those who can't find insurance on the traditional market. Participation more than doubled between 2020 and 2024 to nearly half a million homes — many of which were in areas devastated by the Palisades and Eaton fires.

Measures to keep home insurers from fleeing California

The bill for the bailout will be divided among private insurers based on their market share in the state. As of 2023, State Farm, Farmers Insurance, and CSAA Insurance held the largest percentage of policies in California, according to S&P Global data. They have 30 days to pay the FAIR plan and — under a rule change made by California Insurance Commissioner Ricardo Lara last year — insurers can request approval to pass up to half those costs onto residential and commercial policyholders.

The change was part of Lara's broader strategy to lure private insurers back to California to help stabilize the market. The rules also should make it easier for companies to raise premiums and factor in the costs of reinsurance and risks of future disasters. In exchange, insurers will have to expand coverage in communities most at risk of wildfires.

Lara said he approved the FAIR Plan bailout to protect consumers and blamed 30 years of stagnant regulations for putting more people at risk.

"The FAIR Plan must pay claims just like any other insurance company," he said in a statement. "I reject those who are hoping for the failure of our insurance market by spreading fear and doubt. Wildfire survivors can't cash 'what ifs' to pay for food and rent, but they can cash FAIR Plan checks."

Some consumer advocates on Tuesday threatened legal action to stop private insurers from surcharging customers.

"This gift to insurance companies rewards bad behavior and will only incentivize insurers to drop even more homeowners and force them onto the FAIR Plan in the future because there's no consequence for abandoning these families," said Carmen Balber, executive director of Consumer Watchdog in Los Angeles.

Are you a homeowner with a story to share? Reach out to these reporters at [email protected] and [email protected].

• State Farm wants to hike insurance premiums in California to help pay for LA wildfire damage.
• Insurance affordability has deteriorated with intensifying disasters and home-repair inflation.
• This hurts housing affordability and long-term property values.

The aftermath of the Los Angeles wildfires could exacerbate a mounting challenge for California homeowners: ever-higher insurance costs.

California's largest home insurance provider, State Farm, has asked state regulators for emergency permission to raise homeowners' rates by an average of 22%, starting May 1, to avert a "dire situation" for the company's finances following the fires, according to a Monday letter to the state's insurance commissioner. The company also asked to raise premiums for renters and condo owners by 15% and by 38% for landlords.

State Farm said it had fielded more than 8,700 claims related to the LA wildfires and paid out about $1 billion as of Saturday but expected to spend far more. The fires destroyed some of the city's priciest real estate, including in the Pacific Palisades, as well as Malibu's. They're set to be the costliest in US history. The company says wildfire payouts are placing "very significant pressure" on its ability to pay claims.

Some analysts estimate the damage could total between $250 and $275 billion, a bill that will be split among local and federal governments, insurers, and residents. But the full cost won't be clear for years.

State Farm said its finances were already strained from previous years' losses, leading one rating agency to downgrade it.

"Insurance will cost more for customers in California going forward because the risk is greater in California," the company said in the letter, adding that an emergency rate hike is "essential to more closely align costs and risk" and allow the company to rebuild capital.

A spokesperson for State Farm pointed Business Insider to its letter when asked for comment.

Intensifying home insurance market instability

California has long faced home insurance issues spurred by surging costs from more frequent and intense disasters coupled with rising home-repair costs and inflation. Since 2022, major insurance companies — including State Farm, Allstate, and Farmers Insurance — have either stopped writing new policies in the state, pulled back coverage, or in some cases, dropped tens of thousands of property owners.

State Farm in May 2023 stopped writing new homeowners policies in California. The following March, the company dropped about 29,000 homeowners in the state — including nearly 70% of policies in Pacific Palisades, where January's blazes caused some of the worst losses. That nonrenewal process is ongoing but was recently paused in Los Angeles County due to the wildfires. As of February 1, State Farm said it has more than one million homeowners policies in California.

State Farm said its finances had taken a hit over the nine-year period ending in 2024. During that period, the company paid out $1.26 in claims and expenses for every $1 collected in premiums. Its after-tax net losses totaled $2.8 billion. State Farm said its financial position will be further weakened by the LA wildfires.

State regulators last August approved Allstate's request to hike home insurance premiums by an average of 34%. State Farm said it filed for a 30% rate increase for homeowners policies last June, which is still pending. That would be on top of rate increases State Farm got approved in 2023, including a 6.9% bump in January and a 20% bump that took effect in March.

Ripple effects on housing across the country

The rising cost of insurance and the growing cancellations of private insurance policies are compounding housing affordability issues across the country.

A Senate Budget Committee investigation found that private insurers' nonrenewals spiked threefold in more than 200 counties between 2018 and 2023. Homeowners who are denied private insurance can often opt for their state's insurer of last resort, though these policies tend to offer more restricted coverage and higher premiums.

Rising insurance costs hurt homeowners and potential homebuyers alike, as well as renters who face increased costs passed along by their landlords. Some retired homeowners and others on fixed incomes are already struggling to deal with rising premiums, which, combined with rising property taxes, add up to more than mortgage payments for a growing number of homeowners.

Rising insurance costs are also expected to hurt property values in the longer term. A recent study from the research firm First Street found that a combination of rising home insurance premiums and falling demand, particularly in areas hardest hit by climate change, will erase almost $1.5 trillion in US real estate values by 2055. The report found that 40% of property-value losses will occur in communities it calls "climate abandonment areas," which are the most at risk of out-migration and insurance premium spikes.

This trend is particuarly alarming given that Americans are increasingly moving into parts of the country most vulnerable to extreme weather. In 2023, tens of thousands more people moved into the most flood—and fire-prone areas of the US rather than out of them, the real estate company Redfin reported.

Have you been impacted by rising insurance premiums or lost your coverage? Reach out to these reporters at [email protected] and [email protected].

• A study found that the climate crisis is set to knock $1.47 trillion off US property values by 2055.
• Some areas are predicted to be hit harder by population declines and rising insurance premiums.
• The steepest impacts on home prices are predicted to be in parts of California and New Jersey.

The impacts of the climate crisis will erase $1.47 trillion in home values across the US by 2055, a new study from research firm First Street found.

The effects will not be spread equally across the country. In some areas, home price gains may be able to outpace losses, but some places will be harder hit.

First Street estimated that 40% of property-value losses will be concentrated in places it calls "climate abandonment" communities. In these locations — primarily in California's Central Valley, at risk of wildfire, and coastal New Jersey, at risk of flood and wind damage — a combination of population decline and rising insurance premiums are predicted to drive down home values.

First Street found that 21,750 neighborhoods spread across the US, or 26% of current US census tracts, qualify as what it calls climate abandonment" communities.

Recent extreme weather events highlight the staggering cost of natural disasters fueled and worsened by climate change. Last year, back-to-back hurricanes Milton and Helene devastated parts of Florida and the Southeast, with Milton alone causing up to an estimated $28 billion in insured losses. Recent Los Angeles wildfires are expected to total close to $250 billion in total damages.

Over the next several decades, First Street's researchers predict more extreme weather events will recalibrate the places Americans find safe to call home. When the population dwindles for any reason, home prices are likely to fall due to a lack of demand.

Consider the way Hurricane Sandy affected the Jersey Shore. Many lower-income residents of New Jersey living along the Atlantic coast were unable to rebuild in those areas due to the soaring cost of flood insurance. Amanda Devecka-Rinear founded the New Jersey Organizing Project, a nonprofit to improve disaster recovery funding, after driving around Long Beach Island, located in Ocean County, and seeing rows of abandoned houses.

"People just got pushed out or had to walk away or had to sell their places because they could never cobble together the funding to get back," Devecka-Rinear told Business Insider in 2022.

Below are Ocean County and four other communities First Street highlighted for their risk of "climate abandonment" and, therefore, property value declines. The percentages for each county are forecasts from First Street from 2025 to the year 2055.

5. Kern County, California

Kern County, known as the energy capital of California, is located inland, about a two-hour drive north of Los Angeles. Its biggest cities include Delano, Ridgecrest, and Bakersfield.

Market impact: -1.8%

Insurance impact: -2.3%

Total property value impact: -4.1%

4. Sacramento County, California

Sacramento County, located an hour north of San Francisco, is home to the state capital, Sacramento.

Market impact: -2.7%

Insurance impact: -1.6%

Total property value impact: -4.2%

3. Monmouth County, New Jersey

Monmouth County is home to several popular Jersey Shore vacation spots, including Asbury Park, Belmar, and Sea Girt.

Market impact: -0.7%

Insurance impact: -3.6%

Total property value impact: -4.2%

2. Ocean County, New Jersey

Ocean County is located directly south of Monmouth County and includes other popular destinations for Jersey Shore beachgoers, including Seaside Heights, Barnegat Light, and Mantoloking.

Market impact: -3.3%

Insurance impact: -1.1%

Total property value impact: -4.4%

1. Fresno County, California

Fresno County is located just north of Kern County. Fresno County was the site of 2020's Creek Fire, which burned for 112 days and was the third-largest single fire in state history.

Market impact: -4.6%

Insurance impact: -9.8%

Total property value impact: -14.4%

Most single-family houses are built around a few main ingredients: wooden framing, a sloping roof that hangs over the sides, vents that keep air circulating through the attic. These features are key to churning out new builds quickly and relatively cheaply, and they've remained more or less the same for decades. They also make it easier for homes to burn.

The fires that swept through the Los Angeles area were the result of an extreme scenario: The confluence of hurricane-force winds, dry brush after months of drought, and the construction of old homes near combustible wildlands set the stage for the blazes to spread rapidly. The devastation in Altadena, the Pacific Palisades, and Malibu, where the Eaton and Palisades fires have destroyed more than 16,000 structures and killed at least 28 people, is especially stark given that California's building standards are some of the strictest in the world. In much of the rest of the country, the housing stock is even less equipped to face the rising threat of fire.

The ongoing fires bear a warning for other cities that have pushed residents farther and farther from the urban core in search of space to build. The risk of fire damage is greatest in areas known as the wildland-urban interface, or WUI — pronounced, charmingly, as "woo-ey" — where human-made sprawl meets undeveloped land. Data from the US Forest Service indicates the number of homes in WUIs grew by almost 50% from 1990 to 2020; about 48 million homes, or almost a third of residential units nationwide, are in counties that face a high risk of fire. Homeowners in California and beyond, architects and researchers tell me, must begin wrestling with how to fortify their own houses.

"As we've seen with LA and some of the other fires in California and Maui, it's not just a WUI issue anymore," Michael Eliason, the founder and principal of the Seattle architecture firm Larch Lab, tells me. "These are quickly becoming urban fires."

Perhaps the most confounding images from the LA fires show the outliers: homes miraculously left standing in the middle of flattened neighborhoods. Architects I've talked to generally agree that chance played a big role in deciding which structures survived. But as Sean Jursnick, a Denver-area architect, puts it, the owners of the spared houses may have "created some of their own luck."

Measures to reduce the risk of fire damage include straightforward design tweaks such as streamlining exteriors to eliminate the nooks and crannies where stray embers can settle, or getting rid of vegetation that could shuttle flames to the main structure. Then there are the cutting-edge materials — wrapped in jargon like "cementitious fiber-reinforced composite building system" — that offer alternatives to the flammable lumber that dominates home construction.

Interventions by both homeowners and builders are growing more necessary as the risk of fires increases — and as insurers get pickier about which properties they'll cover. Soon, many people across the US may have no choice but to build smarter.

Scott Long has spent decades in pursuit of a material capable of unseating lumber as the go-to option for home frames. The basics of home construction haven't substantially evolved since the 1800s, when building the skeletal structure out of dimensional lumber — your classic two-by-fours, etc. — came into fashion. Wood components, Long says, are "literally the worst possible product you could use" in the event of high winds, flooding, or fire since they burn (unlike concrete) and aren't as sturdy as, say, steel. Masking wood with something like magnesium oxide board or stucco siding, both of which are more resistant to fire, is fine, Long says, but "not a solution."

"It's time for change here," Long tells me. "We can't keep building the way we've been building up against these types of historic events."

Given these problems, Long founded NileBuilt in 2019, building homes primarily out of fiber-reinforced concrete panels with foam insulation in the middle. The company's model homes look simple and modern, all flat roofs and sharp edges, and it says the materials can withstand temperatures of more than 2,000 degrees Fahrenheit — the panels, unlike the walls of traditional homes, won't combust from the extreme heat of a neighboring fire. Long says the cost of building his homes roughly matches that of wood-frame houses. A quiet start to 2025 for his company has turned into a frenzy; he says that even before the fires, the waitlist for one of the homes was just under 3,000 people.

Eliason isn't calling for the kind of paradigm shift in building materials that Long suggests. He pointed to a widely seen X post showing a Pacific Palisades home that survived with little apparent damage, saying it was "not a concrete house or brick house or anything" — other measures its owner took may have mattered a lot more. And wood has its own advantages: It's cheap, and lumber production doesn't release nearly as much carbon as concrete or steel. In the event of an earthquake, its pliability is a huge plus. For all these reasons, Eliason says, "going away from wood-frame construction seems really shortsighted."

Instead, he advocates more-modest tweaks that can add up to real risk mitigation. A streamlined, boxy structure offers fewer places for stray embers to linger. These embers are often good fuel for a wildfire's spread — they can travel several miles by air, then enter through vents or settle on a combustible part of the home, igniting another conflagration. By getting rid of nooks and crannies like roof overhangs (also known as eaves) or little windows that jut out of the roof, builders can reduce fire risk. Materials also matter: Builders can wrap a home in noncombustible mineral wool and install drywall capable of withstanding an hour of direct contact with flames. Metal roofs are preferable to classic shingles.

The house Eliason referred to has many of these features: stucco finishes, a metal roof, tempered windows, no roof vents or eaves on its sides. But there's an even smaller adjustment that may have helped keep the flames away: a buffer around the house devoid of vegetation. Jursnick recalls a conversation with another architect who likened nearby plants and bushes to the tinder you'd use to light a campfire. Removing those is an example of a little thing even weekend-warrior home-improvement types can do to better protect their homes. Another is replacing old vents with newer models designed to deny entry to embers. Costlier measures include swapping in a metal fence for the wooden version or opting for a new metal roof.

Decades-old homes, like many in the Pacific Palisades and Altadena, are much more susceptible to fires than newer builds. But retrofitting them to meet modern codes is more expensive than adding fire-resistant features to new construction from the get-go. Research from the environmental economists Patrick Baylis and Judson Boomhower suggests that California homes built after the state tightened its building codes in 2008 are about 40% less likely to be destroyed in a fire than a 1990 home exposed to an identical blaze. Another study of the 2018 Camp Fire, which destroyed most of the town of Paradise in northern California, found that only 11.5% of single-family homes built within city limits before 1997 survived, compared with a 38.5% survival rate for those built that year or later.

Boomhower walked away from his study convinced that more local governments should mandate fire-resistant building codes rather than wait for builders and homeowners to wise up to their benefits. Normally, an economist like him might be skeptical of government rules for something that is so obviously a good investment — buyers of new homes should be motivated to protect what is likely their biggest asset, codes be damned. But Boomhower's study found limited adoption of these best practices in areas that didn't require them.

"Homebuilders and home buyers are just not always aware of the risks and aware of the low-hanging-fruit options for mitigation," Boomhower tells me. The data also suggests there are spillover effects that could protect non-improved homes: Investments made by just one homeowner can help stunt the spread of a blaze, making it less likely that their neighbors' homes burn down. And insurers may be more willing to extend policies to homeowners in areas where they know many builds meet these criteria.

This is far from just a California issue. A handful of states, including Montana, Nevada, and Pennsylvania, and 200 local jurisdictions have adopted the International Code Council's standards for building fire-resistant homes in WUIs. Austin, for example, adopted the code in 2015 and is considering an update that would expand the WUI's borders in hopes of protecting more homes. Homeowners that go beyond even the strictest codes, either during the initial construction or as part of a retrofit, may score discounts from insurers or state-level tax breaks.

But even with city-level and homeowner-level interventions, Eliason tells me, "there's no guarantee of protection." The logical thing, he says, would be to build more densely in areas far from the WUI to limit the number of homes at risk in the first place. In the absence of that kind of fix — which would involve sweeping changes to the zoning laws that say what you can build and where — better materials and design can make a difference.

Jursnick, the Denver-area architect, has been thinking about this stuff a lot recently. He's working on plans for an apartment building in an area just outside Boulder that was burned in 2021 by the Marshall Fire, which destroyed more than 1,000 homes. Much of the community input, he says, has revolved around how to prevent that kind of tragedy from happening again.

"If we're going to keep building more homes in those areas," Jursnick tells me, "I think we need to be more thoughtful of how we build, and adapt our building strategies in those areas to acknowledge that risk."

James Rodriguez is a senior reporter on Business Insider's Discourse team.

• The top scientist at real-estate firm CoreLogic lives in an LA area affected by the Palisades fire.
• Howard Botts said he chose his home's location carefully and added extra protections against fire.
• He said his home is safe but that big challenges lie ahead for his neighbors and other homeowners.

This as-told-to essay is based on a conversation with Howard Botts, chief scientist and executive leader of CoreLogic's science and analytics team, which studies the climate crisis and risks from natural disasters. The interview has been edited for length and clarity.

I live in the Rustic Canyon area of Pacific Palisades, a neighborhood in the city of Los Angeles — 20 miles west of downtown.

We've had fires in the community before, but usually, they get suppressed pretty quickly. The recent fires are an anomaly.

On the day it all started, I could see smoke and fire on the top of the Santa Monica Mountains in the city. The wind was blowing at 30 to 50 miles per hour. which I knew wasn't good because winds flow from the mountains to the ocean.

My wife and I began packing up essential things, getting ready to evacuate. We had no idea how fast that fire was going to spread. Within a couple of hours, much of our city was engulfed in flames.

We evacuated from our house, along with tens of thousands of residents from Pacific Palisades and surrounding areas.

Last Thursday, I was able to walk into Rustic Canyon. Miraculously, our house had no damage, but there's a lot of ash, debris, and smoke damage that will need extensive clean-up. We may have to remove the drywall and insulation if deep cleaning doesn't remove the campfire smell.

I live on the south side of Sunset Boulevard, just below Will Rogers State Park. Virtually all the homes on the north side of Sunset and above burned — including Billy Crystal's house and Will Rogers' historic home.

As you go up the hill from where I live, into the main part of the Palisades, it looks like the pictures you see of Hiroshima after the atomic bomb was dropped. Literally everything is gone, except for some fireplaces and metal staircases.

Palisades residents didn't anticipate the fires even though the area is high-risk

The Pacific Palisades is uniquely located between the Pacific Ocean and the Santa Monica Mountains, which rise about 1,000 feet above the city — just a few miles from the coast. The mountains offer beautiful views but are also heavily covered with chaparral, making the area at high risk for wildfires.

I was very aware of this and avoided living in the hillside area.

A question I get a a lot is, "Why do people live in the Palisades, up in the hillside?"

I think it's a calculated risk. For some, the area's amenities outweigh the perceived risk.

The homes in the neighborhood range from $3 million to $64 million, so people living here have some level of assets and probably feel secure. The area is also unique in that, even though it's part of the city of LA, it has a small-town feel.

I think all of those things caused people to maybe downplay the wildfire risk. They thought nothing like this would ever happen.

The Palisades fire ignited for several reasons

You would never envision an entire community burning, but the wildfires were born from a perfect storm of events.

Increasing average temperatures put stress on vegetation in the mountains that hadn't burned in 30 years.

Extremely high wind speeds also played a major role. The winds carried embers a mile from the wildfire, blowtorching flames out of the mountains and into flat, more urban areas. In those areas, houses, fences, and vegetation were already burning well ahead of the fire's front.

There were also human-caused factors. Fire departments and responders ran out of water, so fire suppression that would normally occur on the ground ceased for a period.

Fires in this area are also typically attacked from the air with airplanes and helicopters. However, those aircraft were grounded due to the high winds, preventing the use of fire retardants and other aerial suppression methods.

I don't plan to leave the Palisades, but I've taken steps to protect my house and family

I absolutely plan to continue living in the Palisades.

As a scientist and a fourth-generation Californian, wildfire risk is always at the forefront of my mind. I've mitigated everything I could around my property, from installing double-paned windows and a fire-resistant roof.

My house is anchored in bedrock, so my earthquake risk is relatively low. Plus, I live high enough above the Pacific Ocean that I don't have to worry about sea level rise.

Conversely, it will take a decade for my community to return.

Many older homes likely had asbestos or lead, requiring major remediation efforts, including removing soil and other materials. This will prevent people from moving back in immediately.

Also, the stores, banks, post offices, and schools are all gone, so any sense of community closeness is lost.

It will be a long time before this area bounces back — that will be the real challenge.

Insurance costs could impact whether people who lost homes rebuild or move

The Palisades is relatively affluent. However, the areas affected by the Eaton fire have many more middle-class residents.

I think the fires will change the character of those neighborhoods, because the key question is, "Can residents afford to rebuild at the cost it will take?"

Building codes have changed, so homes being rebuilt will need to meet the latest standards, including indoor sprinklers for fire suppression and fireproof Class A roofs, which will increase both materials and costs.

Another question is, "Do residents have enough insurance coverage to make rebuilding possible?"

California definitely has an insurability problem at the moment.

In September, a major insurer did not renew my policy. The only fire insurance I could get was through the California FAIR Plan, the insurer of last resort. My overall homeowners premium increased from $2,800 a year to $12,800 a year for less coverage than I had previously.

With higher insurability costs, some of my neighbors are considering moving to lower-cost areas in other parts of California. I think we'll see this play out nationally as well.

Over the next 30 years, we'll likely see people moving to regions they've historically left, such as cities around the Great Lakes — Milwaukee, Chicago, Detroit — where climate change impacts are expected to be more moderate.

Californians will also need to adjust how they build homes

A key question is how places like California can stay safe with rising temperatures.

We'll see more happening at the community level, where neighbors band together to clear vegetation around homes to reduce wildfire risk.

Additionally, there will be more pressure on individual homeowners to mitigate wildfire risk on their properties — such as avoiding wood fences, decks, and pergolas attached to the house.

We'll also see insurers incentivizing homeowners to make changes that reduce risk. For example, some neighbors were told they could lower their rates by removing pine or eucalyptus trees from their property.

Going forward, I think there will also be much greater investments in California's public safety, including making sure there is adequate water supply, fire suppression equipment, and other resources.

• Dana Bull plans to optimize her real estate portfolio in 2025 rather than acquiring more properties.
• She aims to increase revenue by focusing on insurance, taxes, and renovation costs.
• With insurance costs on the rise, any investor can benefit from shopping around.

Dana Bull isn't looking to acquire any more properties in 2025.

The experienced investor built wealth by buying primarily multi-family properties in Massachusetts. She's also a real-estate agent and consultant, and a mother of four. Between her various work projects and renovating her primary residence, she says she has plenty to keep her busy in 2025.

While she's not expanding her doors, she still expects to grow her revenue in the new year.

Any investor can benefit from optimizing what they already own, said Bull: "If you're not going to buy right now — for personal reasons or you just don't like the interest rates or whatever is going on — this could be a good year to just focus on your business, your expenses, and tighten up what you already have."

Specifically, she's looking to optimize in three categories, which could improve her returns significantly.

1. Insurance

Like many investors and homeowners, Bull has seen her insurance rates rise over the past couple of years.

The general trend is that "insurance is harder to get and it's more expensive," she said. "That cost for me has just jumped. It's a big line item. I have had the same provider for the past 10 years, and I need to just go out there and procure quotes and make sure that I'm not getting overcharged for what's being covered."

It can be time-consuming to keep track of each policy and its changes, especially if you own a lot of properties.

"I feel like it's the wild, wild west," said Bull of navigating the insurance world. "Many times, a program that we have a property covered by will just be dropped, or they'll no longer cover that property for reason X, Y, or Z, so it's like this revolving door of making sure that the properties all have coverage — and the right coverage."

She says she's been more "passive" about optimizing insurance in the past, but now that prices are soaring, she plans to shop around and do her due diligence in 2025.

2. Taxes

In addition to insurance, her property taxes have gone up.

"The tax rate has not gone up, but the value of the properties has gone up so significantly that you're just paying thousands more a year for taxes," explained Bull. One of her properties, for example, will cost an extra $2,000 a year. "If I multiply that across my whole portfolio, that's a lot of money."

If you think your property is overvalued, you can appeal your property assessment.

"I think I have a few properties that are overvalued," said Bull. "Some aren't, so obviously there's nothing to do there. But if I can make a case and bring in comps and show them this is an overvaluation and now I'm being taxed higher than I probably should, I have found in the past that if you're just a squeaky wheel, they'll work with you."

3. Renovation costs

Bull has seen the availability and cost of hiring contractors vary dramatically over her investing career.

"When I first started in real estate, which was at the tail end of the recession, contractors were out of work, and they needed work, so the pricing was way different 10 years ago than it is today," she said. "And then during the pandemic, everybody was renovating their home and contractors had such a surplus of work that they could basically charge whatever they wanted, and you were going to pay it because you were desperate."

Heading into 2025, "the tides are kind of turning," she said, in that contractors won't be able to pick their price.

It's worth it to shop around, said Bull, adding that you may be surprised by the varying prices you receive. For example, she had to replace three roofs for one of her multi-family properties: "One quote came in at $30,000, another came in at $21,000, and then another came in at $12,000. And I'm reviewing the quotes and pretty much everything is the same. The product is the same."

While meeting with multiple contractors can be "a pain in the butt," she acknowledged, it could mean tens of thousands of dollars in savings.

• Thousands of LA County homeowners face a volatile home insurance market.
• In recent months, State Farm — California's largest home insurer — dropped thousands of policyholders.
• Some have turned to the state's insurer of last resort.

Thousands of California homeowners at risk due to the Los Angeles County fires find themselves exposed in a volatile home insurance market.

Last year, California's largest home insurer — State Farm — canceled thousands of policyholders' plans across LA County, including the Pacific Palisades and parts of Santa Monica and Calabasas, that are under evacuation orders and warnings as the fires rage. Nearly 70% of State Farm policyholders in the affluent Pacific Palisades neighborhood were dropped by the company beginning in July 2024.

The following table shows the ZIP codes that were under evacuation orders or warnings as of Wednesday afternoon that had the highest rate of nonrenewals from State Farm last year.

Several other major insurers have dramatically restricted their coverage across California in recent years, citing surging costs from more frequent and intense disasters coupled with rising home repair costs and inflation.

Thousands of LA County homeowners who haven't been able to obtain private insurance have joined the ranks of those covered by the state's insurer of last resort — the Fair Access to Insurance Requirements (FAIR) plan. The FAIR plan is regulated by the state government and backed by a slew of private insurance companies. But its premiums tend to be much higher than typical private insurers and its coverage is often more restricted.

This table shows how FAIR insurance coverage has changed in the above ZIP codes between 2023 and 2024.

As private insurers have stepped back in recent years, the number of residential FAIR plan holders across the state jumped 123% between September 2020 and September 2024. The FAIR plan's dollar-value residential exposure surged from $271 billion in September 2023 to $431 billion in September 2024.

It's not clear how many homeowners impacted by the LA County fires are uninsured. Most mortgage lenders require homeowners to purchase insurance, and some require additional insurance for specific disasters, including fires.

Some major home insurers, including Farmer's — the second-largest in California — have recently begun to expand their offerings in California after the state announced new regulations requiring insurers to cover a certain percentage of homes vulnerable to fire in exchange for allowing them to use future risk modeling to calculate premiums.

In 2023, California had the fourth-highest home insurance nonrenewal rate among states, according to a recently released Senate Budget Committee report. Six of the top 10 counties in the country with the highest rates of nonrenewals by large home insurers in 2023 were in California, the report found.

But rising home insurance costs and rates of dropped policies are nationwide problems. The National Bureau of Economic Research recently reported that average home insurance premiums spiked by 13%, adjusted for inflation, between 2020 and 2023. The share of home insurance policies from large insurers that weren't renewed increased last year in 46 states, the Senate report found. And more than 200 US counties saw their non-renewal rates spike threefold between 2018 and 2023.

Areas more vulnerable to disasters, including flooding, wildfires, and hurricanes, have seen the biggest spikes in premiums and dropped policies.

"Our number one priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy," a representative for State Farm told BI.

A representative from the California FAIR Plan Association also told BI in a statement that the insurer is "prepared" to handle the wildfire impact, and "has payment mechanisms in place, including reinsurance, to ensure all covered claims are paid."

Representatives for Farmer's did not respond for comment.

Have you been dropped by your home insurance company or are you facing a steep premium increase? Email this reporter to share your story: [email protected].

• Homeowners are increasingly being dropped by their private home insurers.
• Regions with the highest nonrenewal rates are most prone to wildfires, hurricanes, and other disasters.
• A new Senate report warns of economic risks as climate change destabilizes insurance markets.

Homeowners across the country are increasingly facing a stark new reality: they're losing their home insurance.

The share of home insurance policies from large insurers that weren't renewed increased last year in 46 states, a report released Wednesday by the Senate Budget Committee found. The increasing frequency and intensity of disasters like wildfires, hurricanes, and flooding and the rising cost of rebuilding have pushed many insurers to drop customers or hike premiums. This has left thousands of homeowners scrambling to find new insurance policies or joining the growing ranks of those going without insurance.

More than 200 counties saw their non-renewal rates spike threefold between 2018 and 2023. Counties in Northern California and South Florida saw among the highest rates of nonrenewals. Coastal counties in Massachusetts, Mississippi, and North Carolina also saw dropped policies soar. Manhattan ranks 20th, with rates of dropped policies rising from 1.25% in 2018 to 4.11% in 2023.

The national scale of home insurance nonrenewals was previously unknown because insurance companies are regulated at the state level. The National Association of Insurance Commissioners said not all states collect granular data about the availability and affordability of coverage in some areas. The association in March announced an effort with state insurance regulators to try to fill the gap.

Senate Budget Committee Chairman Sheldon Whitehouse launched his own investigation into the homeowners' insurance market last year. He received nonrenewal data from 23 companies accounting for about two-thirds of the market. In testimony on Wednesday, Whitehouse said he demanded nonrenewal data because experts suggested policies being dropped were an early warning sign of market destabilization. He also said they correlated with higher premiums.

The American Property Casualty Insurance Association, a lobbying group representing insurance companies, said nonrenewal data doesn't provide "relevant information" on climate risks. Many factors, including a state's litigation and regulatory environment, factor into nonrenewal decisions, the association said.

The association added that more costly weather disasters, combined with inflation and overbuilding in climate-risk regions, are making insurance less affordable for many Americans.

Home insurance premiums are rising in many regions across the country. The National Bureau of Economic Research recently reported that average home insurance premiums spiked by 13%, adjusted for inflation, between 2020 and 2023.

Most mortgage lenders require homeowners to purchase insurance, and some require additional insurance for specific disasters, including flooding. Insurers refusing to offer coverage can hurt home values because homes that can't be insured in the private market are less desirable to potential buyers.

The Senate Budget report warned that the insurance crisis will get worse as the climate crisis fuels more frequent and destructive disasters, including hurricanes, wildfires, and flooding. A destabilized insurance market could "trigger cascading economy-wide financial upheaval," the report said.

"The failure to deal with climate change isn't just driving up the cost of homeowners' insurance, it's making it harder for families to even find homeowners' insurance, and that makes it harder to get a mortgage," Whitehouse said in a statement to Business Insider. "When the pool of buyers is limited to only those who can pay cash, it cuts off pathways to homeownership—particularly for first-time homebuyers—and risks cascading into a crash in property values that trashes the entire economy."

Have you been dropped by your home insurance company or are you facing a steep premium increase? Email these reporters to share your story: [email protected] and [email protected].

• Private home insurers are dropping a growing number of customers in most states, a Senate report found.
• That leaves homeowners at risk, turning to more expensive last-resort options or going uninsured.
• While Florida has managed to reverse the trend somewhat, the risk to homeowners is set to intensify.

As Americans flock to places in the US vulnerable to natural disasters, private home insurance companies are running the other way.

The problem has left a rising number of homeowners with just one option to cover property damage: insurers of last resort.

The scale of homeowners losing their plans became clearer on Wednesday after a Senate Budget Committee investigation found that private insurers' nonrenewals spiked threefold in more than 200 counties between 2018 and 2023.

"What our new data reveal is that the failure to deal with climate change is also affecting whether families can even get homeowners insurance, which threatens their ability to get a mortgage, which spells trouble for property values in climate-exposed communities across the country," Senate Budget Chairman Sheldon Whitehouse said in releasing the report.

A recent study by Harvard University's Joint Center for Housing Studies found that between 2018 and 2023, the number of properties enrolled in California and Florida's insurers of last resort more than doubled. A similar trend is playing out in Louisiana. While Florida has reduced participation this year, it still has the highest enrollment in the country.

The problem isn't isolated to the most predictable states. The Senate Budget Committee found that the rate of homeowners losing their private insurance also rose in Hawaii, North Carolina, and Massachusetts.

Policymakers and insurers are trying to stabilize the private market, by enacting new laws and overhauling regulations. However, with scientists predicting that climate-fueled disasters will become more frequent and severe for the foreseeable future, the risk to America's homeowners is mounting.

Growing insurance risk has some states looking for solutions

In nearly three dozen states, insurers of last resort, known as Fair Access to Insurance Requirements, or FAIR, are available to homeowners and businesses who struggle to find insurance on the private market.

The numbers are rising because private insurers are pulling back coverage and hiking premiums in areas at risk of wildfires, hurricanes, flooding, and other disasters often made worse by climate change.

While state-mandated FAIR plans are designed to be a backstop, insurance regulators and private insurance companies are alarmed by how many homeowners and businesses are enrolling, especially in California and Florida. The plans are often more expensive and provide less coverage. Plus, saddling one insurer with the riskiest policies increases the chances of one major disaster sinking the system and leaving taxpayers and insurance companies with the bill.

Florida and California are trying to reverse the trend, and Florida has seen some progress. The state's insurer of last resort, Citizens Property Insurance Corporation, said on December 4 that its policy count dropped below 1 million for the first time in two years.

Mark Friedlander, a spokesperson for the Insurance Information Institute, said the drop reflects a series of changes in recent years to stabilize the state's private insurance market after more than a dozen companies left the state or stopped writing new policies.

The Florida legislature passed laws to curb rampant litigation and claim fraud that drove up legal costs for private insurers. Friedlander said insurance lawsuits in the first three quarters of 2024 are down 56%, compared with the first three quarters of 2021 — the year before the new laws were enacted. Citizens also started a "depopulation" program that shifts customers to the private market. State regulators in October said they had approved at least nine new property companies to enter the market, and premiums weren't rising nearly as much as last year.

In California, many of the deadliest and most destructive wildfires have occurred within the last five years. As a result, some private insurers are hiking premiums and limiting coverage in risky areas, pushing more homeowners to the insurer of last resort. The Harvard study found that policies in the state's FAIR plan doubled between 2018 and 2023 to more than 300,000. As of September, the California Insurance Commission said policies totaled nearly 452,000.

The commission is working to overhaul regulations to slow the trend, including requiring private insurers to sell in risky areas. In exchange, it should be easier for companies to raise premiums that factor in reinsurance costs and the risks of future disasters. That should help stabilize rates, said Michael Sollen, a spokesman for the commission.

Sollen added that in the past, private insurers could seek approval for higher premiums but weren't required to offer coverage in wildfire-prone areas.

"In a year from now, what's happening with the FAIR plan will be a key measure for us," he said. "We expect to see those numbers start to stabilize and go down."

A mounting home insurance crisis

Still, a reduction in state-backed plans isn't necessarily a sign of progress, Steve Koller, a postdoctoral fellow in climate and housing and author of the Harvard report, told Business Insider.

A growing number of homeowners in places like Florida, Louisiana, and California are purchasing private insurance from nontraditional providers barely regulated by state governments. These so-called "non-admitted" insurers don't contribute to a state fund that guarantees homeowners will have their claims paid even if the insurance provider fails, leaving their customers without access to this backup coverage.

"Someone could be moving to a private insurer from Citizens, and that insurer might have higher insolvency risk," Koller said.

He added that more homeowners are opting out of insurance altogether. The number of US homeowners going without insurance has soared from 5% in 2019 to 12% in 2022, the Insurance Information Institute reported.

Plus, Americans are increasingly moving into parts of the country most vulnerable to extreme weather. Tens of thousands more people moved into the most flood—and fire-prone areas of the US last year rather than out of them, the real estate company Redfin reported earlier this year.

As insurers of last resort try to shift more risk to the private market, home insurance premiums are expected to keep rising. That's especially true in the areas hardest hit by climate-fueled disasters.

If private insurers exit hard-hit regions en masse in the future, Koller said states might need to become the predominant insurance provider in the same way the National Flood Insurance Program took over after the private market for flood insurance collapsed in the 1960s. Most flood insurance plans are still issued by the federal government.

"My guess is states are going to work very, very hard to avoid that and ensure the existence of a robust private market, but that's a parallel that I can't personally unthink about," he said.

Have you struggled to get home insurance, moved to an insurer of last resort, or gone uninsured? Contact these reporters at [email protected] or [email protected].

• Floridian homeowners face mounting uncertainties following hurricanes Helene and Milton.
• One resident is afraid of residents abandoning homes after storms if they can't pay to be fixed.
• An inland real-estate agent worries that some snowbirds won't return to buy new properties.

A destructive hurricane season has dealt a blow to Florida's housing market, which was already struggling with surging homeowners' association costs and a home insurance crisis.

In October, the five metropolitan areas nationwide with the biggest year-over-year drops in pending home sales were all located in the Sunshine State, according to a new report from real-estate site Redfin.

Over a four-week period ending November 10, pending home sales dropped 15.2% in Ft. Lauderdale, 14% in Miami, 13.8% in West Palm Beach, 9.5% in Jacksonville, and 7.2% in Tampa.

In Tampa, pending home sales actually fell as much as 32.2% during the month prior, when both Hurricanes Milton and Helene made landfall. The drop has leveled out at 7.2%, indicating the worst impacts may be over.

Pending home sales are deals where a contract is signed, but the sale has not closed. With a typical window of one to two months between the sales of homes and their closings, pending home sales can be an early indicator of market shifts.

Hurricanes Helene and Milton have exacerbated concerns about the future of property values and the cost of homeownership in Florida. After the storms, which made landfall in September and October, the state suffered an estimated $21 to $34 billion in damages, including uninsured properties.

At the same time, insurance experts have raised the alarm that an affordability crisis is likely to worsen. Some Florida cities, like Jacksonville and Cape Coral, saw average home insurance payments for mortgaged single-family residences jump at least 85% since 2019, according to financial services company Intercontinental Exchange.

"Florida represents an outsize amount of risk compared to other areas of the world," Kyle Ulrich, president and CEO of the Florida Association of Insurance Agents, told Business Insider in October.

For some residents, the mood on the ground is anxious.

Three Florida homeowners shared their concerns about the cost of rebuilding after hurricane damage, their home values, and the storms' impact on seasonal residents who are key drivers of the state economy.

Retirees couldn't afford to raise their home, then it was hit by a hurricane

In 2021, Jon and Lyn Drake purchased a home in Yankeetown, Florida, which is about two hours north of Tampa and less than 10 minutes from the shores of the Gulf of Mexico.

Their 800-square-foot house, located just feet away from a small riverbed, had belonged to a neighbor who died and cost them $190,000.

The dream home soon turned into a nightmare for the retired couple, aged 71 and 69. Last fall, Hurricane Idalia floodwaters reached within a foot of the house, the closest it had ever been, prompting Jon to look into services that could raise the home.

The Drakes said they were quoted prices to lift the house from around $130,000 to as high as $229,000, which they felt they couldn't afford.

"There's not a lot of companies that do it here, and it's just really price-gouging right now," Jon told BI.

Then Hurricane Helene barreled through Yankeetown. The couple lost their kitchen appliances, washer and dryer, and a new generator. The floors will have to be torn up.

For now, the couple is waiting to see how their insurance claims shake out to figure out their next steps. They want to rebuild, but are worried about how much of the cost they'll have to shoulder themselves.

"We're in a holding pattern right now," Jon said.

A coastal resident worries about his home value

John Adams, a retiree who lives near Yankeetown in Inglis, said his home was 15 inches away from taking on water during Hurricane Helene.

His home, raised 12 feet above ground, is the highest in his neighborhood, he said.

With the increasing power of storms coupled with skyrocketing insurance costs, Adams worries about homeowners in a pinch walking away from devastated homes. That could, in turn, lower the quality and value of the neighborhood. As Adam sees it, it's in his best interest to help pay for other peoples' homes to be raised.

"I'm in favor of paying for somebody else's fund to raise their homes. Because if we can solve that problem, it helps my values," he said.

Adams thinks either taxes could be raised or a new state agency could be created specifically to focus on raising low-lying homes that are most at risk. Currently, regional authorities like the Southwest Florida Water Management District are tasked with flood prevention and FEMA provides grants to some homeowners after a disaster.

"Nothing is ever going to fix or safeguard homes from flooding except 'elevate, elevate, elevate,'" he said "You can't outrun the water."

A real-estate agent thinks snowbirds could get scared away

In Ocala, located an hour from the Gulf of Mexico coastline, real-estate agent Emily White worries about how the severity of this year's storm will impact the snowbirds.

The annual migration of mostly elderly residents from cold-weather states who flock to the Florida sunshine to ride out the winter months plays a key role in the state's economy.

An estimated 1.5 million seasonal residents make up the snowbird flock, according to the Associated Press, representing a temporary 6.5% bump in the state's population.

"I'm praying the snowbirds come back this year. I need them to come back so I can get some of my listings sold, but we'll see how it's affected," White told Business Insider. "Will they come as hot and heavy as they did before these storms?"

White said a potential buyer from Arizona called her after seeing the devastation of Hurricane Milton, wondering if she might need to alter her plans to buy and how the storms would affect home-insurance costs.

Even if there's no immediate impact this winter, White expects the hurricane jitters to leave a lasting impact. Buyers who were looking at coastal properties might move more inland and some prospective buyers may choose to rent instead, she told BI.

"I think it'll deter people overall," White said.