In recent years, climate-related events have had a serious impact on both homeowners and those looking to purchase a home. In a new report, the U.S. Department of the Treasury’s Federal Insurance Office analyzed ZIP codes across the U.S. to figure out where insurance premiums are highest. The report found homeowners insurance is not only becoming more costly but even harder for Americans to procure. On average, homeowners insurance premiums increased 8.7% faster than the rate of inflation between 2018 and 2022. However, homeowners in communities more likely to be affected by severe weather events are paying even more. From 2018 to 2022, homeowners living in the 20% of ZIP codes with the highest expected annual losses to buildings from climate-related events paid $2,321 in premiums, on average. This is 82% higher than the amount paid by the 20% of ZIP codes at the lowest risk of climate-related disasters.
“Treasury’s analysis comes at a time of devastating tragedy, loss of life, and destruction from the wildfires in the Los Angeles area,” said Secretary of the Treasury Janet L. Yellen. “While it’s far from clear what the exact financial costs of this disaster will be, it is a stark reminder of the impacts of the growing magnitude of natural disasters on the U.S. economy. Moreover, this disaster does not stand alone as evidence of this impact, with other climate-related events leading to challenges for Americans in finding affordable insurance coverage – from severe storms in the Great Plains to hurricanes in the Southeast. This report identifies alarming trends of rising costs of insurance – to consumers and insurers themselves – as well as lack of availability of insurance, all of which threaten the long-term prosperity of American families.” Read more