Homeowners across the United States are paying an average of $648 more annually for insurance compared to 2021, according to data from the Consumer Federation of America cited in a new analysis by Pioneer Institute. The report, published in 2026 by government transparency intern Mia Raineri, examines how climate-related disasters and post-pandemic construction costs are driving insurance premiums higher in both traditional high-risk areas and states previously considered low risk.
The states hit hardest by percentage increases were Utah (59%), Illinois (50%), Arizona (48%), and Pennsylvania (44%). But when measured in absolute dollars, Florida led with a staggering $2,118 increase, followed by Louisiana at $1,775 and Kentucky at $1,426. Even low- and middle-risk states saw premiums climb nearly 30% on average. Kentucky, for instance, experienced a 34% jump since 2023 despite scoring low-to-moderate in social vulnerability and high in community resilience on the National Risk Index. The state's sharp increase contrasts with neighboring Ohio and West Virginia, where premiums stayed constant. Meanwhile, construction costs have accelerated beyond general inflation since the pandemic, directly impacting premiums because homeowners' insurance covers the "replacement value" of homes.
The report finds that the data reveals "two things about the effect of climate risk on insurance premiums: new areas are being exposed to disasters and known high-risk areas are facing exacerbated impacts." For Kentucky specifically, the analysis attributes steep increases to "the rise in wind and hail events across the state and flooding from the Ohio River." According to the report, insurers have argued that rate increases stem from general inflation, but "material costs have outpaced inflation since the pandemic," with construction price indexes showing steady increases since the 2008 recession that accelerated sharply in 2020.
The mechanisms driving these increases extend beyond weather alone. Rising building materials and skilled labor costs directly influence housing prices, which in turn push up insurance pricing because policies must cover higher replacement values. States like Florida and Louisiana face compounded risk due to coastal proximity and susceptibility to flooding and hurricanes, while previously moderate-risk states are now seeing more frequent severe weather events. The report notes that Kentucky exhibited only small losses in agricultural and building value, yet premiums still spiked dramatically—suggesting that frequency of events, not just severity, is reshaping the insurance landscape nationwide.
As premiums climb, the federal safety net is shrinking. The report reveals that the federal government has cut approximately $750 million in resilience funding and clawed back $900 million in allocated grants for preventative measures like stormwater systems and flood-control networks. FEMA has reduced its staff by roughly half and raised the threshold for what qualifies as a disaster-level response, with disaster declarations dropping sharply in 2025 and 2026 even as climate incidents continue. More than 200,000 applicants in Gulf Coast and Mid-Atlantic states have sought housing assistance through FEMA's Individuals and Households Program, but with narrowed federal scope, state and local governments will be forced to shoulder costs their budgets can't handle. The report recommends that if FEMA can't expand funding, it should at least help states develop timelines for taking on greater responsibility—because disasters and inflation are inevitable, and planning around the risk could provide future relief despite upfront costs.