How Climate Change Is Hiking Insurance Costs

A new study from Storm Law Partners reveals how climate change is creating a national insurance affordability crisis, with homeowners in disaster-prone states facing soaring premiums and fewer coverage options. According to 2024 NOAA data, the U.S. endured 27 major climate events, costing hundreds of billions in damages. Hurricanes, tornadoes, hailstorms, wildfires, and severe floods are increasingly overwhelming both communities and insurers.

Tornado and Hail Hotspots

While hurricanes and wildfires make headlines, tornadoes and hail are driving a quieter affordability crisis in the Midwest and South.

Nebraska: 63 tornadoes in 2023 — a 142% increase over 2022. Douglas County is labeled “very high risk” for hail, giving Nebraska the third-highest expected hail losses nationwide. Homeowners paid $4,725 on average in 2024, projected to rise to $5,203 in 2025.
Kansas: Recorded 89 tornadoes in 2024, nearly double the year before, plus 948 severe wind events and 778 hail events in 2023 (+68% year-over-year). Premiums of $4,556 are expected to rise another 5% in 2025.
Alabama: Over 400 tornadoes in five years caused $34 million in damage. Premiums averaged $5,445 in 2024 and are forecast to climb to $5,831 in 2025, with many insurers exiting the market.

These trends underscore how even non-coastal states are becoming increasingly uninsurable.

The Growing Cost of Hail

Hail is proving especially costly. Large hail events in Colorado, Nebraska, and Kansas have become more frequent, driving billions in roof and siding claims. FEMA now ranks multiple counties in these states as “very high risk” for hail.

In response, insurers have shifted from “replacement cost” coverage to “actual cash value” — reducing payouts by factoring in depreciation, leaving homeowners to cover more of the bill.

Premiums Outpacing Inflation

From 2021–2024, U.S. homeowner premiums rose an average of 24%, far above the 11% cumulative inflation rate. In tornado- and hail-prone states, the hikes are often far steeper. One in three policyholders has faced increases of 30% or more in a single year.

Projections regularly underestimate reality. In Florida, 2024 premiums averaged $14,140 compared with projections of $11,759. Texas premiums came in at $6,005 versus forecasts of $4,437.

Insurer Retreat and Coverage Gaps

Following patterns seen in hurricane-hit Florida and wildfire-scorched California, insurers in tornado and hail states are reducing exposure by:

Refusing to renew policies in high-risk counties.
Exiting states entirely when regulators restrict sharp rate hikes.
Requiring higher deductibles for wind and hail coverage.

This leaves many homeowners reliant on expensive state-run insurers of last resort.

Legal Ramifications

Storm Law Partners notes that this crisis is driving increased litigation. Common cases involve:

Breach of contract, where insurers deny valid claims using technicalities.
Bad faith claims, when insurers delay or underpay without justification.
Class actions, especially against insurers accused of systematically underpaying hail damage claims.

In one case, homeowners challenged a hail-damage algorithm, alleging it systematically undervalued repair costs.

Expert Insight

“People think of tornado alley as predictable,” said a spokesperson for Storm Law Partners. “What’s changed is the clustering and intensity of events. Insurers can’t price the risk accurately, so they withdraw. That leaves homeowners facing higher costs, weaker coverage, and fewer options.”

What Lies Ahead

By 2035, climate models predict even more destructive weather events, adding strain to both insurers and policyholders. Labor shortages, supply chain pressures, and rising material costs will drive premiums higher still.

While homeowners can take steps — such as upgrading roofs, bundling policies, or raising deductibles — the long-term trend of escalating costs is unlikely to reverse. For many, legal action is becoming the only way to ensure insurers meet their obligations.

For the full study, visit Storm Law Partners