Americans are paying more for homeowners insurance and repairs as natural disasters drive up costs and reshape where people can afford to live.
Data from Bank of America shows that homeowners hit by disasters saw their insurance premiums rise by an average of $921 per year. It was more of a sticker shock for high-risk states like California, Texas, New Jersey and Georgia: More than 10% of households experienced price increases of $2,000-plus annually.
“The severity and frequency of natural disasters — and ever-rising insurance costs — could change which areas homebuyers consider affordable or desirable,” said Liz Everett Krisberg, head of Bank of America Institute.
“Such events can be a significant strain on household budgets, forcing people to spend on everything from repairs to rebuilding, thus constraining, or even temporarily eliminating, spending on certain discretionary items,” she added.
And the disasters keep coming. Since 2024, the U.S. has witnessed more than 90 major disaster declarations, which have nearly doubled the 30-year average, according to an analysis from the International Institute for Environment and Development. These events affect about 41% of the population and have caused more than $2.9 trillion in damages since 1980.
Climate-related disasters have become more frequent and less predictable. Insurers, meanwhile, are facing mounting pressure. Rising claims, repair costs and climate risk are forcing them to reassess where they offer coverage and how they price it, especially in high-risk areas.
In California, a string of catastrophic wildfires triggered an insurance crisis, prompting state leaders to find ways to bring more property insurers back after many either dropped or limited coverage in the state.
Allstate, for example, reported paying out $1.1 billion in claims related to January’s California wildfires, while State Farm asked the California Department of Insurance for an interim 22% rate hike for homeowners to avoid further financial strain.
In response, Governor Gavin Newsom signed an executive order this week tasking several state agencies to come up with recommendations by January 2026.
But California isn’t alone. Data from the Treasury Department shows the problem is nationwide. Between 2018 and 2022, homeowners' insurance premiums rose nearly 9% faster than inflation. Nonrenewal was 80% more common in high-risk zones, making it harder to find coverage. Florida, Louisiana and Mississippi are among the least affordable states.
Cost to rebuild climbs
Americans spend more fixing up their homes every time a disaster hits.
After Hurricane Helene in 2024, Bank of America found that households in the affected areas spent 6.7% more on home improvements than they did the year before. The spending was even larger after the Los Angeles wildfires, increasing 17.8% compared to the same period last year.
That spending surge didn’t just show up in household budgets, but also in retailers' earnings, as people rushed to repair and upgrade their homes.
Lowe’s saw same-store sales increase by about 1% thanks to storm recovery spending after Hurricanes Helene and Milton, the company's chief financial officer, Brandon Sink, said during its fourth-quarter earnings call. Home Depot also saw a boost, with sales in disaster-hit regions adding 0.6% to overall growth during the fourth quarter.
This type of spending reflects the extent to which these events can be disruptive. In 2023 alone, about 2.3 million people were pushed out of their homes in the U.S. due to weather-related disasters, according to the U.S. Census Bureau. Hurricanes were the main reason for displacement.
“All of this underscores the displacement effect of natural disasters on local communities, particularly lower-income households,” Krisberg said.