rising-home-nsurance-costs-due-to-climate-events-treasury-department-report

**Rising Home Insurance Costs Due to Climate Events: Treasury Department Report**

Firefighters battle flames during the Eaton Fire in Pasadena, California, U.S., Jan. 7, 2025. Climate-related natural disasters are driving up insurance costs for homeowners in the most-affected regions, according to a Treasury Department report released Thursday.

**The Impact of Climate Events on Home Insurance Costs**

In a voluminous study covering 2018-22 and beyond, the Treasury Department revealed staggering statistics about the financial toll of climate-related natural disasters on homeowners across the United States. The report highlighted that there were 84 disasters costing $1 billion or more, excluding floods, resulting in a combined $609 billion in damages during the period under review. Notably, floods are not covered under homeowner policies, further complicating the financial burden on affected individuals.

**Premium Increases and Disparities Across Zip Codes**

During the period studied, insurance costs surged 8.7% faster than the rate of inflation, with the most significant impact felt by residents living in areas hit hardest by climate-related events. For consumers residing in the 20% of zip codes with the highest expected annual losses, premiums averaged $2,321, marking an 82% increase compared to those in the 20% of lowest-risk zip codes. This disparity underscores the challenges faced by homeowners in high-risk areas as they grapple with escalating insurance expenses.

**Challenges for Homeowners and Insurers Alike**

Nellie Liang, the undersecretary of the Treasury for domestic finance, emphasized the growing challenges posed by the costs of climate-related events on both homeowners and insurers. As climate-related disasters continue to wreak havoc across the country, the affordability and accessibility of homeowners insurance are increasingly in jeopardy, posing significant threats to the long-term financial well-being of American families.

**Calls for Action and Preparedness**

Treasury Secretary Janet Yellen urged for immediate attention to the issue, highlighting the need for proactive measures to address the rising costs of insurance and ensure the protection of homeowners in vulnerable regions. The report’s findings serve as a stark reminder of the urgent need to prioritize disaster preparedness and mitigation efforts to safeguard communities against the escalating impacts of climate change.

As you reflect on the implications of the Treasury Department’s report, consider the following: How can we collectively work towards building more resilient communities and ensuring the financial security of homeowners in the face of mounting climate-related challenges?