CarInsurance.com Insights
- Severe weather events have skyrocketed in the last few years, resulting in more car insurance claims and higher premiums for all drivers.
- Hail and flooding can cause massive damage to a vehicle, and you must carry comprehensive coverage for the damage to be covered by your policy.
- Inflation, people moving to high-risk areas, an increase in car theft and sky-high reinsurance costs are also impacting car insurance premiums.
The changing climate is producing more weather disasters, which leads to more claims, higher costs for insurers, and eventually more expensive premiums.
2025’s Eaton Fire in Altadena and Palisades Fire in Pacific Palisades, California, which exceeded $20 billion in insured losses, set a new record for wildfire-related claims in U.S. history.
The fire even wreaked economic havoc in Europe: Swiss Re faced reinsurance losses of about $700 million, while Munich Re saw reinsurance losses of $1.16 billion. Hannover Re took a hit of $825.9 million, and SCOR lost $167 million.
Unfortunately, the cost of auto and home insurance is tied to the environment, and as climate change worsens, premiums will continue to rise.
How much do severe storms cost?
The total losses for 2024 were estimated at around $182.7 billion. They came in a variety of forms, including wildfires, floods, tornadoes and severe hail events.
In 2024, the U.S. experienced 27 weather and climate disasters each causing at least $1 billion in damages — just one short of the record 28 events in 2023. These disasters resulted in at least 568 deaths, ranking as the eighth-deadliest year for billion-dollar events since 1980.
Climate change is fueling more severe weather events
Climate change is making these storms more frequent, according to NOAA data. The total number of storms has climbed dramatically in the last five years.
In the 1980s, there were a total of 33 storms that caused at least $1 billion – which breaks down to 3.3 storms a year. During the past five years, that number has jumped to 102 storms – 20.4 a year.
More significant storms lead to more claims and higher costs for insurers, which almost always result in higher premiums for policyholders.
Severe weather leads to higher premiums
As the frequency and severity of storms have increased, so have insurance premiums. Climate change has led to a major increase in the number of storms in recent years, and in the same time frame, car insurance premiums have skyrocketed dramatically.
“Severe weather events like hurricanes, floods and hailstorms have become much more frequent and intense, leading to higher claim costs for insurers, which translate into higher premiums for policyholders,” says John Crist, founder of Prestizia Insurance in Dallas.
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How much have auto insurance premiums increased in a decade?
According to Statista, consumers in the United States increased their spending on auto insurance by almost 50 percent between 2012 and 2022. Back in 2012, drivers were paying $1,018 on average for auto insurance; that number jumped to $1,592 by 2022.
However, the last few years have seen a much more significant increase. According to Statista, car insurance costs saw a massive increase around 2018 when the average expenditure on vehicle insurance was $976. In 2019, the car insurance rate jumped to $1,545.
The average cost of a full coverage policy in 2025 is $2,513, while a liability-only policy with limits of 50/100/50 averages $801 per year.
Another consequence? Insurers are pulling out of risky markets
In addition to raising premiums, insurers have started to pull out of specific markets where premium increases can no longer match the risk insurers face.
In 2023, Allstate, State Farm, Merastar Insurance Company, Unitrin Auto and Home Insurance Company, Unitrin Direct Property and Casualty Company and Kemper Independence Insurance Company stopped writing coverage in certain areas of California. They claimed California would not let them raise premiums high enough to cover the fire risk.
Florida is another state that has lost several insurance companies due to weather-related risks and out-of-control insurance fraud. Drivers in Florida currently pay some of the highest car insurance rates in the country.
As insurers leave, drivers and homeowners are left with fewer, and almost always, more expensive options. In some states, many policyholders may end up at the state insurer of last resort.
Drivers continue to relocate to high-risk areas
While climate change is impacting the cost of insurance, it’s not the only factor that’s a problem. Recent years have seen more people moving to high-risk areas for disasters than low risk areas. If more people live and drive in high-risk areas, the risk is higher for claims, raising the cost of insurance.
According to Redfin, from 2016 to 2020, more people moved to high-risk weather areas, such as Florida, Texas, Arizona and Nevada, than to lower-risk states. While housing may be cheaper in some of these areas, insurance prices are headed up, or in the case of Florida, are already some of the highest in the country.
A Freddie Mac report found the pandemic accelerated people moving to higher-risk areas. The report found:
- Migration to high-risk areas from low- and moderate-risk areas has doubled since the onset of the pandemic.
- During the pandemic, more people moved to areas at high risk of wildfires, droughts and hurricanes.
As people move into areas where severe weather is more frequent, claim rates rise which will always result in premiums heading up.
Other factors impacting car insurance rates
While climate change is a significant factor in rising insurance costs, it is not the only factor increasing premiums. Below are additional factors contributing to higher auto insurance rates.
Inflation
Car insurance is not immune to inflation, and it has helped push up prices. As car prices, parts, labor costs and repair costs go up due to inflation, the cost of repairing and replacing vehicles gets more expensive. Insurers pass those higher costs onto policyholders via higher premiums.
Reinsurance
This is insurance for insurance companies, and the cost for reinsurance has risen dramatically. Because the reinsurance market is global, a natural disaster anywhere in the world can impact reinsurance rates. When they do, insurers in the U.S. must pay more for reinsurance, which raises rates for everyone.
How car insurance covers climate-related issues
Car insurance covers several weather-related issues, and which coverages you carry will decide if the damage is covered. Here is a brief overview of car insurance coverages and how they cover climate change issues:
- Liability: This coverage pays out to cover medical, legal, and property damage expenses that you do to other people or their property. If you hit a patch of black ice after a winter storm and slide into another person’s vehicle, your liability coverage would pay out to repair your car and cover any medical bills if necessary.
- Comprehensive: Comprehensive will pay to repair your vehicle if a storm damages it. This includes hail and wind-related damage as well as flooding. Comprehensive also offers protection for animal strikes, fire, theft, vandalism and more.
- Collision: Collision will pay to repair your vehicle when it is involved in a collision. This can be with another driver who slid in the snow into your vehicle. It will also repair your car if you slide into a fence, power pole or other immovable object.
- Uninsured motorist: If the driver who hydroplaned into your vehicle is uninsured, this coverage will kick in to repair your vehicle.
How to lower your car insurance premium
As climate change continues to impact the cost of insurance, looking for ways to save is important.
“Maintaining a clean driving record and driving a vehicle with safety features like anti-lock brakes or daytime running lights may help you lower your premium,” Crist says.
While there is a good chance that climate change will continue to push up car insurance premiums in the near future, there are a few steps you can take to help keep your rates affordable:
- Shop your coverage: This is key in the world of climate change, insurers rate risk differently and that can result in significant differences in premiums. Shop your coverage annually or every time your insurer raises your rates. Shop both national and regional insurers and compare apples to apples regarding deductibles and coverage levels.
- Consider your car: Vehicles loaded with safety features such as autonomous braking, lane departure and advanced airbag systems qualify for safety discounts that can lower your insurance premiums. The savings can be significant, so check which vehicles qualify for the most considerable savings with your insurer.
- Increase your deductible: You must pay out of pocket before your coverage kicks in after a claim. If you can afford a higher deductible, your insurer will lower your premium. Doubling your deductible can result in a significant drop in your premium, but always choose one that you can easily cover in the event you have to make a claim.
- Discounts: Insurers offer plenty of discounts, so make sure you are getting every discount you are eligible to receive. Have your agent or insurer do a discount review to ensure all available discounts are being applied. Bundling home/renters insurance with your car insurance is a great way to save.
- Drive less: This is a great way to save on your insurance premium and help reduce climate change.
“Usage-based insurance rewards policyholders who don’t drive a lot with lower premiums. Insurers have found that offering more customized policies based on how much and how well people actually drive has made insurance more affordable, even with increasing climate risks,” says Geoff Stanton, president at Stanton Insurance in Waltham, Massachusetts.
Many insurers offer discounts for drivers who drive less than a certain number of miles a year. This coverage can drop your costs dramatically if you don’t drive much.
“Review your policy limits and deductibles to ensure you have the proper coverages,” Crist says. ‘By taking proactive measures to understand your risks and options, you can find competitive rates for the coverage you need despite the challenges of climate change.”
Frequently Asked Questions: Climate change and car insurance
Why is climate change making my car insurance more expensive?
As the frequency and severity of storms increase due to climate change, insurers face more claims and expenses related to paying for those claims. When insurance company costs increase, they pass those expenses onto policyholders via higher premiums.
Is climate change the only reason my insurance premiums have gotten so expensive?
No. The increased cost of car repairs, inflation, expensive cars and risky driving all have contributed to pricier premiums.
Is there any way to lower my car insurance premium?
You can save money by shopping for your coverage often, getting all discounts you qualify for, raising your deductible or moving to a mileage-based policy and driving less.
Resources & Methodology
Sources
- EuroNews. “California wildfire costs set to impact European reinsurance giants.” Accessed October 2025.
- FreddieMac. “Migration to Environmentally Risky Areas: A Consequence of the Pandemic.” Accessed October 2025.
- NOAA. “2024: An active year of U.S. billion-dollar weather and climate disasters.” Accessed October 2025.
- Statista. “Average annual expenditure on vehicle insurance per consumer unit in the United States from 1984 to 2022.” Accessed October 2025.
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