Car insurance premiums and climate change linkages examined
Rising Car and Home Insurance Premiums in 2025: A Regional Analysis
Climate change is causing a significant increase in car and home insurance premiums across the United States, with the rate of increase varying significantly by region due to differing exposures to extreme weather events and insurance market conditions.
According to reports by Insurify and the Insurance Fairness Project, full-coverage car insurance premiums are forecasted to increase between 4% and 7.5% in 2025, influenced by climate change impacts such as more frequent and severe natural disasters, along with other factors like vehicle technology and driving behaviors[1][2][3]. The average national premium is projected to be near $2,400 to $2,470 by the end of 2025[1][3].
However, regional differences are notable:
- States prone to climate-related disasters, such as Florida, are expected to see some of the largest premium increases. Florida, for example, saw an initial 8% rate drop but is projected to have a 7% premium increase in late 2025, potentially pushed higher by tariff-related insurer costs, raising the average to about $3,100[3].
- The Carolinas face particularly intensified insured losses from hurricanes, with an anticipated 40% increase in losses from single severe events compared to a 25% national increase, which will drive up both home and car insurance premiums in these regions[4].
- Other states such as Rhode Island, Michigan, Maine, Washington D.C., and Delaware may see premium increases of 12% or more due to higher claims and tariff impacts[3].
- In contrast, some states like Vermont, Maine, Hawaii, and Rhode Island could see flat or even declining car insurance rates unless tariffs impose additional hikes[3].
- Maryland and New York remain among the highest-cost states for car insurance, partly due to urban risk factors compounded by climate-related incidents, while states like New Hampshire and Wyoming maintain comparatively low premiums[2][3].
The changing climate and extreme weather events are a major factor in the availability and pricing of car insurance. Severe weather events, such as hail storms, hurricanes, floods, and winter storms, affect auto insurance rates. For instance, the deadly Los Angeles County fires in January destroyed as many as 6,300 vehicles[5].
In addition to climate change, rising repair costs tied to new vehicle technologies and unsafe driving behaviors also put upward pressure on premiums nationwide[2]. The US President's tariff agenda has also contributed to the changes in car insurance rates[6].
Similarly, the Insurance Fairness Project's report published on July 30, 2023, stated that extreme weather events have been affecting homeowners insurance policies[7]. The average home insurance premiums have increased by more than 40% since 2019[8]. If tariffs do not affect rates further, the average increase in home insurance rates by the end of 2025 would be 4%[8].
TJ Helmstetter, a spokesperson for the Insurance Fairness Project, warned that if no action is taken, an economic crisis could occur that could rival 2008[9]. The report was published with permission from Thomson Reuters Foundation, a charitable organization that covers humanitarian news, climate change, resilience, women's rights, trafficking, and property rights[10].
In summary, climate change will cause car insurance rates in 2025 to increase unevenly across the US—with coastal and hurricane-prone areas expected to face the steepest hikes, while some other states may see modest or stable rates. This regional variability reflects differences in climate risk exposure and local insurance market dynamics[1][3][4].
References:
- Insurify
- Consumer Reports
- Insurance Fairness Project
- Carolina Public Press
- Los Angeles Times
- Washington Post
- Insurance Fairness Project
- Insurance Information Institute
- CNN
- Thomson Reuters Foundation
- The Insurance Fairness Project's report, published on July 30, 2023, highlights that extreme weather events, a consequence of climate change, are impacting homeowners insurance policies.
- According to the Insurance Fairness Project, if no action is taken, an economic crisis could occur that could rival the 2008 crisis, due to the rising home insurance premiums caused by climate change.
- The Sustainable Development Goals (SDG) should prioritize environmental-science research to mitigate climate change, as its effects, such as rising car and home insurance premiums, pose a significant financial burden on businesses and individuals.
