Insurance generally operates by pooling risks. Most property owners buy home and vehicle insurance policies, and from that large pool of customers, insurance companies only have to make payouts to the few who experience costly damages. When climate change increases the frequency and intensity of disasters, insurance companies will spread the costs across the customer pool in the form of higher rates.

So even if you haven’t been directly harmed by extreme weather, you’re paying for some of the costs of those climate-worsened disasters. According to realtor.com, average U.S. home insurance rates rose nearly 34% from 2018 to 2023 – and over 11% in 2023 alone.

Some of those higher prices are related to rising inflation because repairing damaged homes has become more costly. But both home and auto insurance rates have consistently risen much faster than the rate of inflation over the past 15 years.

That’s in large part due to climate change. As one example, scientists estimated that climate change made Hurricane Helene twice as destructive and increased its rainfall by over 50% in some areas. Auto data company CARFAX estimated that the storm left as many as 138,000 vehicles flood-damaged across six states in addition to causing tens of billions of dollars in property damage.

Insurance companies themselves purchase reinsurance to make sure they can cover large losses, and reinsurance prices are rising fast to account for climate change. The world’s largest reinsurer, Munich Re, recently noted that 2024 was one of the most expensive years for weather disasters on record, with $320 billion in global losses, of which around $140 billion were insured.