Let’s clarify one thing first; not all U.S. insurers have stopped paying out for extreme weather damage. Many standard homeowners policies still cover named perils like fires, storms, and hail. But as of early 2026, higher premiums aren’t the only thing making people nervous. Claims are harder to get approved, payouts are more limited, and denial cases are becoming more common.

Losses from extreme weather are starting to look less like one-off disasters and more like a regular, ongoing cost. Global insured losses from natural catastrophes have stayed high for years. In 2024, global insured losses from natural disasters were about $137 billion. In 2025, they were around $108 billion, with the United States among the hardest hit regions.

When payouts keep getting larger and as rebuilding continues to get more expensive, the insurance system responds by rewriting the rules like tightening what’s covered and requiring homeowners to pay and prove more up front. Homeowners may see higher deductibles (or the amount of money they spend before insurance kicks in), more exclusions (or things insurance won’t cover), and stricter documentation requirements especially in high-risk regions. The result is thinner coverage and a tougher path to getting your life back on track after a disaster. 

More Claims Are Being Denied

In Oklahoma, Attorney General Gentner Drummond said publicly in December 2025 that his office would intervene in a lawsuit against State Farm, alleging that the company used a so-called “hail focus” program to systematically cut down roof-related claim payments that should have been covered.

Cases like this aren’t just “bad luck” for a few people. These situations are making more and more people realize that even when the damage is similar, claims can face stricter review like more proof of damages, more disputes over what’s covered, and a higher chance of delays, reductions or denial of any coverage at all. One peer-reviewed analysis of Texas Department of Insurance claims data after the 2021 Winter Storm Uri found that 39.2% of claims were denied 13 months after the event. This means well over a third of filers were left to pick up the pieces of their life without any support. 

California offers another strong example. One analysis found that some major homeowners insurers in California had a relatively high  share of “closed claims with no payment/denial” in 2023. In 2023, several major homeowners insurers in California closed roughly46%–50% of claims with no payment.

The insurance market is shifting in a way that changes what coverage actually means. In many high-risk areas, homeowners are paying more for insurance that can be harder to get. And harder to rely on when a disaster hits. That means the real risk isn’t just higher premiums, it’s the possibility of delayed payouts, denied claims, or being unable to find coverage at all and leaving families to front thousands of dollars in repairs and recovery.

When You Can’t Get Coverage

Difficult claims are emotionally exhausting, but not being able to get insurance at all is what truly makes people anxious.

In 2023, State Farm announced that it would stop accepting new homeowners insurance applications in California, citing reasons such as rising catastrophe exposure, higher rebuilding costs, and a tougher reinsurance market. When major insurers pull back, many homeowners are left with only one option: the state’s insurer of last resort system, the FAIR Plan. By early 2026, available figures show the FAIR Plan has grown to roughly550,000–650,000 policies, and the pace of that growth has been extremely fast.

According to official information from the California Department of Insurance, the maximum coverage limit for a residential policy is $3 million. For high-cost housing markets, this creates a very real protection gap: a home may be worth more than $3 million, but the basic coverage cap is fixed at that amount. And for many households, even if their home value isn’t near that $3 million cap, being pushed onto the FAIR Plan can still be a major shock. Because as the last resort, it often comes with a chain reaction of problems. Higher premiums and less comprehensive coverage, with more exclusions and stricter limits. In practice, that can leave people paying more out of pocket after a disaster and spending more time on paperwork and the claims process.

Not All Extreme Weather Coverage Is In The Same Policy

FEMA states clearly that most homeowners insurance policies do not cover flood damage, as flood insurance is a separate policy. So the same heavy rainstorm might be called extreme weather in the news, but in an insurance policy, it may be classified as flooding, standing water, or water intrusion. This inconsistent terminology can leave homeowners to assume a loss is covered, only to find out it’s excluded from a standard policy.

In many states, wind and hail deductibles are calculated as a percentage of your home’s insured value, not a flat dollar amount. That means even a “small” percentage can translate into thousands of dollars you must pay upfront before coverage kicks in. For example, a 2% wind or hail deductible on a $300,000 insured home is $6,000 out of pocket. In many policies, windstorm and hurricane deductibles commonly range from 1% to 5% of insured value, which is roughly $3,000 to $15,000 for that same $300,000 home. The Texas Department of Insurance explains how percentage deductibles work, and across the industry, it’s common to see 1%–5% windstorm/hurricane deductible structures.

This creates a painful reality. It’s not that insurance refuses to pay–it’s that homeowners have to pay a very large amount out of pocket first, and only then does the coverage start to kick in.

Renters Feel It, Too

You don’t have to own a home to get hit by a homeowners insurance squeeze. Renters take the hit directly because renters insurance often has major gaps in coverage. For example, flood damage is typically not covered unless you buy separate flood coverage through the National Flood Insurance Program. 

Many renters are underinsured or uninsured. One estimate suggests that about 45% of renters don’t carry renters insurance at all, which means a single storm can wipe out essentials like clothes, furniture, electronics and even temporary hotel costs. A Federal Reserve analysis finds that higher landlord costs are added to existing rent prices. When landlords face higher property insurance and maintenance costs, those increases often show up in renewal rent, higher building fees, bigger deposits, or stricter lease terms.

This risk exposure isn’t limited to property owners. The Harvard Joint Center for Housing Studies notes that a large share of U.S. rental units are located in FEMA-defined high-risk counties, which are more likely to experience disaster exposure. When risk is repriced, it reaches renters fast.

This Is Bigger Than Homeowners Insurance

When it comes to weather-driven risk, it isn’t just homeowners insurance that gets more expensive or harder to secure. Commercial property, business interruption, and transport insurance tighten too, and those costs don’t stay with insurers. They get passed through into rent, everyday prices like groceries and shipping costs, and tighter business budgets, which is why this insurance squeeze hits all of us. That’s why solutions have to address the root cause of rising disaster risk, while also helping people manage today’s costs.

Promoting clean energy and reducing emissions can lower the probability of extreme weather occurring in the future and the likelihood of it causing massive property losses. In the meantime, you can also take practical steps like reviewing your coverage, understanding deductibles and exclusions, and comparing quotes before renewing. And if you want to support long-term solutions, sign the renewable energy petition to support clean energy and climate resilience. We need you to make sure risks aren’t shifted onto us again and again.

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