Firefighters battle flames during the Eaton Fire in Pasadena, California, the United States, on January 7, 2025.
Mario Anzoni | Reuters
Climate-related natural disasters are driving up insurance costs for homeowners in the hardest-hit areas, according to a report released Thursday by the Treasury Department.
In a massive study covering 2018-22, which included other data, the department found there were 84 disasters (excluding floods) with losses of $1 billion or more, totaling $609 billion in losses. Flooding is not covered by your home insurance policy.
During this period, the cost of policies across all categories rose faster than inflation by 8.7%. However, the burden falls primarily on those living in areas most affected by climate-related events.
For consumers living in the 20% of ZIP codes with the highest expected annual losses, the average premium is $2,321, 82% higher than for consumers living in the 20% of ZIP codes with the lowest risk.
“As the costs of climate-related events pose increasing challenges to both homeowners and insurers, home insurance is becoming more expensive and consumers are It’s getting harder and harder to get.
The report comes as rescuers continue to fight Wildfires raging in Los Angeles area. At least 25 people died and 180,000 homeowners were displaced.
finance minister Janet Yellen It said the damage caused by the fire was still unknown, but noted the report reflected a serious and ongoing problem. During the study period, the total number of disasters declared annually due to climate-related events was almost double that between 1960 and 2010.
“Furthermore, this (wildfire disaster) does not stand alone as evidence of this impact,” Yellen said, adding that other climate-related events are creating challenges for Americans in finding affordable insurance — serious consequences in the grand scheme of things. Storms to Hurricanes in the Southeast “This report identifies alarming trends in rising insurance costs, all of which threaten the long-term prosperity of American families. “
Homeowners and insurance companies in the hardest-hit areas are also paying through other means.
Nonrenewal rates in the highest-risk areas are about 80% higher than in lower-risk areas, while the average claim amount paid by insurers in high-risk areas is $24,000, compared with $19,000 in the lowest-risk areas.
In the Southeast, which includes states frequently hit by hurricanes such as Florida and Louisiana, claims frequency is 20 percent higher than the national average.
In the Southwest, including California, wildfires burned 3.3 million acres during this period, with five incidents causing more than $100 million in damage. The average loss claim amount is nearly $27,000, nearly 50 percent higher than the national average. The insurance non-renewal rate is 23.5% higher than the national average.
The Treasury Department released its findings with just three days left in the current government’s term. Treasury officials said they hope President-elect Trump’s administration will use the report as a springboard for action.
“We certainly hope that our successor will continue to focus on this issue, continue to conduct important research on this issue, and think about important and creative ways to solve this problem,” one official said.
