Growing insurance crisis leaves homeowners vulnerable
Premiums and dangerous weather events are both on the rise.
Sheila Ramsey turns 60 this year. She’s spent nearly her entire life in the city of Lake Charles, Louisiana, a community of about 85,000 in the heart of the U.S. petrochemical corridor, where industrial facilities sprawl across the coastal landscape from Texas to Alabama. Over the years, Ramsey managed to carve out a livelihood near family here, in this urban center bordered by dense southeast Texas forest, the Gulf of Mexico’s jade waters and coastal prairie. The city’s skyline is made up of gambling resorts and chemical refineries, but local poverty levels are almost twice the national average; some 1-in-4 residents live below the federal poverty line.
Lake Charles also lies in an area that scientists have identified as one of the nation’s most vulnerable to the impacts of climate change — a low-lying region in a hurricane-prone zone where sea levels are rising and protective wetlands have largely vanished.
The region’s vulnerability became evident in August 2020, as Hurricane Laura bore down on the Gulf Coast. Ramsey’s household — Ramsey, her granddaughter and her wheelchair-bound adult son — gathered what they could carry and joined 200,000 residents from across south Louisiana and southeast Texas in heading to safer ground. Some 36 hours after the Ramseys evacuated, Laura, a Category 4 storm, tore through Lake Charles. Winds up to 130 miles-per-hour battered the nearby coast; floodwaters surged up to 18 feet. It was the most powerful storm to hit coastal Louisiana since 1856 and caused roughly $19 billion in damage across the Gulf Coast.
Six weeks later, as Lake Charles residents were just beginning to reckon with the destruction, Tropical Storm Delta hit, blowing off protective tarps and drenching homes in 12 to 18 inches of rain.
In Sheila Ramsey’s house, torrential rain from Delta fell right through a hole that Laura had torn in the roof. The damage was severe, but without a payout from her insurance company, which declared bankruptcy — Ramsey was unable to afford repairs. The house sat, gradually rotting, for years. Left unrepaired and uninhabitable, it was eventually condemned and torn down.
“It’s a big loss,” Ramsey says. “Something you work for all your life and try to leave for your children, it’s just been taken away from you.”
“It’s really a horrible, horrible, just a horrible, situation.”
Weather disasters drive rate hikes and lost coverage
Home insurance is meant to protect the greatest source of wealth for most U.S. families — their homes. But today, the system is in crisis. Climate pollution is making severe storms, wildfires and other dangerous weather events that threaten life and property more likely to occur, making the need for insurance greater than ever. But the cost of rebuilding is growing, driving up premiums, as is the rise in insurance claims due to weather disasters. In some cases, the high volume of claims after disaster is even driving insurers out of business.
The upshot: home insurance is becoming unaffordable or unavailable for a growing number of homeowners, leaving them exposed and vulnerable in an increasingly risky world.
While weather disasters have always caused rate hikes in certain states — hurricane-prone Louisiana and Florida, California with its fires and fault lines — the rise in dangerous weather is also driving increases in places like seemingly tranquil Illinois. State Farm is set to increase premiums in Illinois by 27%. The company cited more frequent severe weather events, including hailstorms and tornadoes, as a cause.
Nationwide, monthly premiums have gone up an average of 24% from 2021 to 2024. High inflation and construction cost increases due to Covid-era supply-chain and labor disruptions have also fueled rate increases. The Trump administration’s tariffs could also create even more increases.
In some parts of the country — mostly in California, Florida and Louisiana — insurers are trying to stay viable by dropping coverage of homes in high-risk areas, or simply not writing new policies in some states. The industry has failed to renew 1.9 million home insurance contracts since 2018. According to a 2024 Congressional investigation, “spiking non-renewal rates ... are often an early warning sign of market destabilization ... The data released with this Report demonstrate climate change beginning to upend insurance markets around the country.”
In Louisiana, a dozen insurers went bankrupt after a series of hurricanes and tropical storms hit their policyholders across the southeast in the span of three years — Laura, Delta and Zeta in 2020, followed by Ida in 2021 and Ian in 2022. Claims from Ida and Ian alone totaled $43 billion. More than 20 insurers have stopped doing business in Louisiana altogether.
California insurers paid out $29 billion in claims after two of the most destructive wildfire seasons the state had ever seen in 2017 and 2018. (Before that time, annual losses had never topped $5 billion.) Seven of California’s top 12 insurance companies have paused or restricted business in the state since 2022, according to a 2023 California Department of Insurance report.
As private insurers drop coverage, homeowners are streaming into state-run programs meant to serve as “last-resort” insurers. Some 33 states offer these programs, which typically don’t provide as much coverage as traditional policies. Premiums can be high too, given the high-risk pool of properties these insurers are expected to cover. Rates for Louisiana’s non-profit state insurer have increased by 164%, on average, since Hurricane Ida in 2021.
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Without insurance, recovery lies out of reach
As insurance coverage becomes increasingly difficult to afford or even obtain, more homeowners are simply going without, according to the Insurance Information Institute — up from 5% in 2019 to 12% in 2024. That’s a troubling trend, says Carolyn Kousky, associate vice president for economics and policy at the nonprofit Environmental Defense Fund.
In a 2020 study she co-authored, Kousky found that uninsured homeowners were more than five times as likely as those with insurance to still be paying for repairs up to five years after a disaster. While wealthier families have enough savings to put their homes and lives back together after a disaster, the same event can knock a low-income family out of stability into lifelong insecurity. Nearly 2 in 5 U.S. households, according to annual surveys by the Federal Reserve, say they do not have enough cash to cover even a $400 unexpected expense.
“When you don't have the resources you need for your recovery and to bring safety to your family, it can impact all aspects of life and can drag out rebuilding for incredibly long periods of time and send some people into deep levels of financial precarity,” Kousky says. “Options get very limited without government programs to help.”
In Lake Charles, about half the city’s affordable rental units were destroyed in 2020’s back-to-back storms. The loss of low-income housing made it even more difficult for families like the Ramseys to return.
“It’s been really rough,” says Ramsey of her family’s housing odyssey, which took them from exile in Lafayette to a two-year stint in a FEMA trailer to her current rented apartment in Lake Charles, which she can barely afford. She’s still paying off a $600 monthly home mortgage on a home that doesn’t exist.
Solutions face headwinds
Congress has discussed legislation to improve the National Flood Insurance Program but has shown no sign of action. And as dangerous weather disasters continue to hit communities across the country, the Trump administration is dismantling limits on the climate pollution that is driving it.
The government is also defunding programs meant to prepare communities to better withstand more storms, heat waves, fires and flooding. Studies show these preventive programs save taxpayers $13 for every $1 invested.
The Federal Emergency Management Agency, often the most important resource for people hit by disaster, is facing major funding cuts and staff losses under the Trump administration. Federal climate and weather data is also being disrupted or eliminated. Weather forecasters, farmers, scientists and communities across the country rely on federal data to forecast storms, prepare for extreme heat, send out early warnings and plan for a future safe from rising sea levels, storms and fires. The vanishing data is also critical to insurance companies, who use it in the modeling that guides their coverage.
At the same time, the Trump administration and Congress have throttled support for clean energy and are seeking to move the country back to burning coal, oil and gas — churning out more weather-intensifying greenhouse gas pollution that is helping drive up the cost of insurance. And the oil and gas industry is expanding its activities exactly where people are the most vulnerable — in storm-wracked, increasingly uninsured communities in southwest Louisiana and Texas, where many people are already contending with multiple sources of industrial pollution in their neighborhoods.
“The only long-term solution is to dramatically invest in lowering our risk,” says EDF’s Kousky. Reducing climate pollution is essential, she says, in combination with other changes, like fortifying homes against severe weather and limiting development in risky areas. “Where communities are leaning into [those ideas], you can see the benefits.”
Texas, California, Colorado and other states have launched programs that provide assistance to homeowners to fortify their homes against damage from wind, fires or flooding, using strategies such as fire-resistant materials, fortified roofs and impact-resistant windows. Many insurance companies offer discounts for homeowners who fortify their homes — and some states demand that they do so.
But it will take far more than state dollars to fix the insurance system, says Kousky, who is developing new ways to make insurance more affordable and accessible. One promising idea is innovative insurance that delivers a quick, automatic payout to residents after a disaster, which they can use to help cover any loss they face, from lost wages to temporary housing or transportation costs. Communities in New York, California and Puerto Rico are testing it out.
For Ramsey, bills have only continued piling up over the years. She admits to falling behind on the mortgage payments for her former home in recent months. These days, their family rents an apartment in Lake Charles. Ramsey hates the occasions in which she’s forced to ask, but her eldest sons sometimes chip in to help her pay monthly bills.
She says she’s thankful their family has managed to keep a roof over their heads. “But it’s nothing like being in your own home,” she says.
She doesn’t see their family leaving Lake Charles any time soon.
They can’t afford it right now anyway.
