Over a Quarter of U.S. Homes, Worth Nearly $13 Trillion, Face Severe Climate Risk—These 3 Cities Bear the Heaviest Homeowners Insurance Costs

On the 20th anniversary of Hurricane Katrina—and just months after the devastating Los Angeles wildfires and the Texas flash floods that claimed at least 135 lives—climate risks loom large. 

This is especially true for homeowners in disaster-prone areas who often are forced to pay top dollar for insurance.

About 26.1% of U.S. homes, with a combined value of $12.7 trillion, are exposed to at least one type of severe or extreme climate risk such as hurricanes, wildfires, or floods, according to the latest Realtor.com® 2025 Housing and Climate Risk report.   

"Understanding climate risk in the housing market is essential, as these challenges not only affect residential safety but also influence property values, insurance costs, and overall market stability," says Realtor.com Economist Jiayi Xu.

The most at-risk metros—predominantly clustered in the South—face the highest insurance costs, as reflected in the premium-to-market value ratio, which measures how much a homeowner is paying in insurance premiums each year relative to the market value of their property. 

For example, if a home is worth $400,000 and the annual premium is $5,000, the premium-to-market value ratio is 1.25%. In other words, the owner pays 1.25% of the property’s value each year in insurance costs.

Miami's insurance cost-burdened homeowners

Miami stands out for carrying the heaviest homeowners insurance burden among the top 100 U.S. metros, with a staggering premium-to-market value ratio of 3.7%, according to data provided by Insurify, a digital insurance agency and comparison platform. 

In other words, a family owning a home with the median market value of $614,000 would be on the hook for $22,718 in insurance premiums every year under an HO-3 home insurance policy—the most common type of single-family homeowners insurance policy in the U.S. 

Notably, Miami is 1 of 5 Florida metros on the list of the top 10 markets with the highest insurance burdens—the most of any state.

However, No. 2 on the list is New Orleans, parts of which were decimated by Hurricane Katrina after the storm made landfall outside the Big Easy on Aug. 29, 2005.

Big Easy burdened by insurance costs

The Category 3 storm's massive surge flooded large swaths of New Orleans and nearby communities, claiming nearly 1,400 lives and causing an estimated $170 billion in damages and lost economic activity, according to the National Oceanic and Atmospheric Administration.

This year, a typical New Orleans household owning a median-priced home had to pay annually $8,328 for homeowners insurance, or 3.6% of the property’s $231,328 value. 

Although New Orleans' median premium-to-market value ratio is only slightly lower than Miami’s, actual insurance costs are six times lower, because homes in Louisiana’s most populous metro are significantly cheaper than in Miami.

However, compared to the median premium in San Jose, CA, a New Orleans household has to pay twice as much for insurance, even though the median home in San Jose is almost eight times more expensive, at $1,856,000.

Xu says this illustrates "how insurance costs can feel disproportionately high for lower-value, high-risk homes."

It's important to remember that homeowners in high-risk areas face additional expenses beyond standard insurance premiums: flood protection is generally excluded from homeowners policies and must be purchased separately; hurricane damage often carries deductibles of 2% to 5% of the dwelling coverage; and wildfire insurance may be limited.

Cape Coral strained by premiums

A midsized city of 204,000 inhabitants in southwestern Florida, Cape Coral is famous for its scenic canals, but its Gulf Coast location leaves it highly vulnerable to hurricanes and flooding.

As a result, the Sunshine State metro has the nation's third-highest premium-to-market value ratio of
2.2%. Simply put, the typical owner of a Cape Coral home with a median value of $393,147 would have to pay $8,649 in estimated insurance premiums per year. 

For comparison, the average premium-to-market value ratio across the top 100 metros was just 0.8%, meaning that for a home with the median value of $435,633, the annual insurance bill would amount to roughly $3,500—or six times lower than in Miami. 

"Numerous factors are impacting the rising costs of home insurance in hurricane-prone Atlantic and Gulf Coast states," Mark Friedlander, senior director of media relations at the Insurance Information Institute, tells Realtor.com. "Population growth in high-risk coastal communities is putting more people and properties in harm’s way of catastrophes. This leads to higher loss costs for insurers, generating rising premiums. Key factors are escalating costs of construction materials and labor."

Furthermore, Friedlander says, a rising number of litigated claims in high-risk coastal areas is pushing up premiums for local homeowners.

"Billboard attorneys are targeting storm victims with a ‘jackpot justice’ marketing approach, promising huge payouts if a consumer hires them to handle their disaster claim instead of settling directly with their insurer," he says.

Glimmers of hope for the insured

But according to the industry expert, there is some good news for homeowners in Florida, where the once-fragile property insurance market has stabilized over the past two years, helped by legislative reform that cracked down on claim fraud and litigation abuses.

As a result of these changes, Florida has recorded the lowest average rate filings and the lowest average premium increases in the U.S. since the beginning of 2024.

During the first eight months of 2025, Florida's average home premiums have ticked up by just 0.5%, while most other coastal states have seen double-digit hikes, according to Friedlander.

Rates are also steadying in Louisiana, with the state regulator reporting an average rate growth of 1.2% year to date in 2025.

"Ten new insurers have entered the Pelican State as legislative reforms are generating market improvements," says Friedlander.

Now, let's take a closer look at the three main types of climate risks and their economic costs.

Hurricane winds

Of the three main types of climate risks, hurricanes in 2025 threatened the highest share of U.S. homes, at 18.3%, valued at a staggering $8 trillion—just under a third of the entire U.S. gross domestic product for 2024. 

And hurricane wind damage can come at a very steep price: While homeowners insurance policies generally cover wind damage, 19 states and Washington, DC, allow additional hurricane deductibles.

For example, under a typical HO-3 home insurance policy with $400,000 in dwelling coverage and a 5% hurricane deductible, homeowners would have to pay $20,000 out of pocket before coverage kicks in. 

For context, that amount is 20 times higher than the standard $1,000 deductible.  

According to data from climate risk analytics firm First Street, a home with a wind factor score equal to or above 7 suggests it faces a severe or extreme high likelihood of experiencing hurricane winds of 51 mph or above over the next 30 years.

Earlier this month, the NOAA updated its 2025 hurricane season outlook originally released in May, reaffirming its forecast for "above-normal" hurricane activity in the Atlantic Ocean through Nov. 30.

NOAA experts expect to see 13 to 18 named storms, with winds of at least 39 mph, of which 5 to 9 could turn into hurricanes packing winds of 74 mph and higher. 

Of those, forecasters say 2 to 5 could escalate to major hurricanes with winds of 111 mph or more. 

The 2024 Atlantic hurricane season featured 11 hurricanes, which resulted in estimated total economic costs and damages of $500 billion, according to AccuWeather.

In 2025, every home is at a severe or extreme risk of wind damage in Baton Rouge, LA; Cape Coral, FL; Charleston, SC; Deltona, FL; Houston, TX; Jacksonville, FL; Lakeland, FL; McAllen, TX; Miami; New Orleans; North Port, FL; Orlando, FL; Palm Bay, FL; and Tampa, FL.

Understandably, homes facing severe or extreme hurricane wind risk are also very likely to be flooded.

Flood

According to the latest figures, over 6% of homes, valued at nearly $3.4 trillion, face severe or extreme risk of flood damage. 

Miami led the metros with the highest total value of homes with elevated flood risk, at $306.8 billion, followed by New York City, with $295.3 billion, and Tampa, with $117.7 billion. 

"The dollar value at risk is highest in a mix of markets where there are many expensive homes and significant exposure," says Xu. 

When looking at the share of value at risk of flooding, New Orleans was ahead with close to 90% of the city's homes facing severe to extreme flood risk. Cape Coral ranked second, with just over 46%, and Charleston, NC, rounded out the top three, with nearly 35%.

But what the latest climate risk report reveals is that homes often could be facing a severe flood threat without their owners even being aware of it, given that flood risks are vastly underestimated.

Here's how that could happen: As of 2025, there are about 4 million homes, with a total price tag of $2.3 trillion, located in FEMA's Special Flood Hazard Areas (SFHAs), which have a 1% or greater chance of flooding each year.

Homeowners in these areas of known high risk are strongly advised and sometimes legally required to carry flood insurance.

But according to recent data from First Street, there are an additional 2 million homes, valued at nearly $1 trillion, that fall outside the SFHAs but may still face major flood risks.

This gaping discrepancy could be explained by the fact that FEMA zones do not take into account heavy rainfall and future climate change, while First Street's model includes those factors.

Put simply, a family could be living in a home located in a flood-prone area, but one that does not fall within FEMA's high-risk flood zone, and could decide to forgo flood insurance coverage.

Fire

About 5.6% of homes, worth a total of 3.2 trillion, in the U.S. face severe or extreme risk of fire damage, and nearly 40% of these properties are in wildfire-prone California.

Among all the metros in the Golden State, Los Angeles ($476.5 billion), Riverside ($474.4 billion), and San Francisco ($274.6 billion) have the highest combined value of homes that have an increased likelihood of being destroyed in a wildfire in the next 30 years.

Insurance access in the state's most at-risk areas has been shrinking, as private insurance carriers pulled coverage from communities known to be prone to wildfires to avoid high levels of exposure.

California's insurer of last resort, the FAIR Plan, saw the number of policies on its books skyrocket, especially after the catastrophic Palisades and Eaton fires that ravaged parts of L.A. and Altadena in January.

As of June, FAIR Plan reported $650 billion in total exposure, a 42% jump from last September—and an eye-popping $289% increase from four years ago.

Outside of California, Colorado Springs, CO, and Tucson, AZ, also have high shares of homes facing elevated wildfire risks.

This information reflects a recent report from Cotality, a property data analytics firm, which revealed that almost 3 million homes across 14 states confined to the Western and Southern regions were facing a heightened wildfire threat and a combined reconstruction cost value of $1.3 trillion.

Nearly half of all the at-risk homes were in California, while Colorado ranked second on the list of states with the greatest number of homes at moderate or greater wildfire threat.