The impact of climate change is finally hitting Americans where it hurts most—their pocketbooks.

According to S&P Global data, U.S. home insurance rates spiked 11.3% in 2023 and are up a staggering 33.8% since 2018. In ten states, premiums rose by more than 42% over five years, led by Texas, Colorado, Arizona, and Utah.

Insurance companies are blaming higher rates on increased climate risks, which they say have caused a spike in natural disasters.

For this reason, insurers, including Farmers Insurance, Liberty Mutual, American Family Insurance, Progressive, Nationwide, and Chubb, have raised their premiums by more than 41% since 2018.

A analysis found nearly half of the country’s homes are located in regions with a higher risk of severe or extreme climate threats. Among them, floods are the most common natural disasters in the U.S., according to FEMA.

Experts say home insurance premiums will continue to rise as insurers pass on the higher cost of coverage to their customers—and for good reason.

Insurers are overexposed to natural disasters

While Americans find it hard to feel sorry for the insurance industry, there are many signs that insurers are struggling to keep their heads above water.

A report by First Street, a New York-based climate data provider, found that insurance companies lost $24.5 billion in the first half of 2023—matching losses for the entire previous year.

The industry has reported three consecutive years of underwriting losses.

The report estimated that a whopping 39 million homes across the U.S. are “underpriced” for the climate risk they pose to insurers.

“Some places may be impacted very minimally, but other places could see massive increases in insurance premiums in the coming years,” said report co-author Jeremy Porter.

“We know the trajectory of climate risk,” said Benjamin Collier, a risk management and insurance professor at Temple University. “As we expect the risks to go up, the costs of insurance have to go up over the next couple of decades.”

In some parts of the country, climate risks have gotten so bad that insurers are refusing to issue policies, leaving homeowners without coverage.

For example, California’s largest insurer, State Farm, paused issuing new policies in the state amid wildfire risks. Allstate, another major insurance provider, did the same.

Meanwhile, Farmers Insurance has ended all coverage in Florida due to hurricane risks.

“With many carriers pulling out, that leaves other companies underwriting these really expensive policies,” said Michael Monaghan, a realtor with Coldwell Banker Sellers Realty, told CNN.

“Policies that cost $10,000 for a year? That is impossible for some buyers who have to pay that all at once [along] with their closing costs.