Climate disasters and inflation pushed US home insurance losses to record levels in 2024
Home insurance carriers in the United States faced their most challenging year in recent memory, as the 10th annual LexisNexis US Home Trends Report revealed a dramatic surge in catastrophic claims and peril severity.
The report, drawing on extensive claims data, showed that all peril severity increased 9% between 2023 and 2024, the highest in seven years.
“These pressures are helping to contribute to higher premiums for US consumers as carriers work to manage rising loss costs,” said George Hosfield, vice president, home insurance, LexisNexis Risk Solutions.
Catastrophe losses surge as climate risks intensify
In 2024, the US experienced 27 climate disasters causing $1 billion or more in damages—21% above the long-term average.
Catastrophe claims accounted for 42% of all claims, while catastrophic losses soared to 64%, both marking seven-year highs.
Wind and hail events were particularly costly. Wind claims severity jumped 23.5%, with loss costs up 30.7%, largely due to Hurricanes Helene and Milton.
Hail loss costs stood 19% above the seven-year average, and nearly two-thirds of hail claims were classified as catastrophic.
The report noted, “the US recorded 11 major hail or severe weather events last year, each causing more than $3 billion in damage—a sharp contrast to previous decades, when such losses rarely exceeded $500 million annually.”
Regional and peril-specific trends emerge
States such as Colorado and Nebraska saw the highest loss costs from catastrophic and hail-related claims, while Texas faced hail as its most expensive peril in 2024.
Meanwhile, fire and lightning loss costs declined 3%, but severity rose 12.2%, influenced by major fires in New York, Connecticut, and New Mexico.
Weather-related water losses also spiked, with loss cost up 25.4% and severity rising nearly 30%, driven by a record 91 flash flood emergencies and severe winter storms.
Non-weather-related water loss costs fell 4.3%, and theft claims dropped by about 20%, although severity for both categories edged higher.
Liability-related losses increased 5.5%, with severity up 18.8%—these figures are flagged as unverified and should be cross-checked with carrier data.
Broader market implications for mortgage and insurance
Rising catastrophic claims have pushed home insurance premiums higher, with nearly half of homeowners seeing rate hikes last year—the biggest jump in over a decade, according to the J.D. Power 2025 US Home Insurance Study.
Analysts expect premiums to rise another 8% nationwide in 2025, and some areas exposed to climate risks could see much bigger increases.
Over the next 30 years, average premiums are projected to climb nearly 30%, with some Florida cities facing hikes of more than 200%.
If insurance costs keep rising faster than home prices, demand could drop and property values may fall, especially in high-risk states like Florida, Louisiana, and California.
Mortgage brokers are already seeing more deals stall or fall through because of insurance issues. Higher premiums or denied coverage can push borrowers over debt limits or make homes ineligible for loans.
In the hardest-hit areas, some buyers can’t find affordable coverage at all, leaving brokers scrambling to save deals.
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