Homeowners insurance is pricing people out in disaster-prone cities

In some coastal U.S. cities, it’s not just the hurricanes and floods putting homes at risk, it’s the cost of insurance itself that’s becoming unsustainable

Twenty years after Hurricane Katrina, and after recent wildfires and floods in California and Texas, the cost of protecting your home from climate disasters is becoming a crisis of its own.

A new report from Realtor.com® shows that more than a quarter of U.S. homes — worth $12.7 trillion combined — are at high risk of being hit by hurricanes, wildfires, or floods. And in places where those risks are greatest, the cost of homeowners insurance is skyrocketing, making it harder for people to afford to live there.

Think of it like this: if your house is worth $400,000 and your annual insurance bill is $5,000, you’re paying 1.25% of your home’s value each year just to keep it insured. That number is called the premium-to-market value ratio.

Here are the three cities hit hardest:

• Miami, Florida – Homeowners pay the most. A typical house valued at $614,000 comes with insurance bills of nearly $23,000 a year. That’s about 3.7% of the home’s value every year.
  

• New Orleans, Louisiana – Second on the list. Insurance costs equal 3.6% of a home’s value, even though the homes themselves are cheaper than Miami’s. It’s a lasting burden from the devastation of Hurricane Katrina.
  

• Cape Coral, Florida – Third place. Homeowners there pay about $8,600 a year to insure a house worth $393,000, or 2.2% of its value.

By comparison, the national average is just 0.8%, meaning these three metros are paying three to five times more.

Experts say the spike is driven by climate change making disasters more frequent, the rising cost of construction materials, and a flood of lawsuits in coastal states that drive up payouts for insurers. Some companies are even pulling out of high-risk areas entirely, leaving homeowners stuck with “last resort” insurance programs.

The bottom line: In cities like Miami, New Orleans and Cape Coral, it’s not just the hurricanes and floods putting homes at risk — it’s the cost of insurance itself that’s becoming unsustainable.

California’s crisis underscores how fragile the insurance market has become in disaster-prone regions. In recent years, insurers canceled or declined to renew millions of homeowner policies across the state, leaving families scrambling for last-resort coverage through the California FAIR Plan. That program, meant only as a backstop, now insures hundreds of billions of dollars’ worth of property. New rules announced this year aim to push private insurers back into fire-prone areas, but they also allow companies to pass on higher costs to customers, meaning many Californians could soon face even steeper bills.

Still, there are early signs of stability in other high-risk states. In Florida, reforms targeting fraudulent claims and runaway litigation have slowed premium growth dramatically with average rates rising by just 0.5% so far this year. Louisiana’s market is also beginning to steady, with new insurers entering the state and average rates climbing just 1.2% in 2025. Industry experts say those steps show it is possible to make coverage both more available and more reliable, even as climate risks grow.

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