- High-Risk ZIP Codes Face Higher Costs: Homeowners in the top 20% riskiest ZIP codes pay an average of $2,321 per year for insurance—82% more than those in low-risk areas, with rising nonrenewal rates.
- Coverage Challenges in High-Risk Areas: Nonrenewal rates are about 80% higher in high-risk ZIP codes, and they’re increasing faster there, making insurance coverage more difficult to obtain.
- Rising Premiums and Claims in High-Risk Zones: Homeowners in high-risk areas face premiums that grow faster than inflation, with claims averaging around $24,000 per event, driving disparities in insurance costs.
- Impact of Climate-Related Disasters on Insurance: Severe events like California wildfires are influencing insurance costs and availability, especially in areas prone to climate-related perils, even before recent disasters.
- Practical Steps for Homeowners Now: Homeowners should review their coverage annually, consider mitigation improvements, compare quotes, and explore non-standard insurers to find better options in high-risk zones.
Homeowners in the riskiest 20 percent of ZIP codes pay an average of $2,321 per year for coverage, 82 percent more than those in the lowest-risk areas. That figure comes from a landmark report released February 24 by the U.S. Department of the Treasury’s Federal Insurance Office, which analyzed more than 246 million homeowners’ insurance policies from 2018 to 2022, the most comprehensive federal dataset ever assembled on the residential insurance market.
The gap isn’t just about cost. Policy nonrenewal rates in those same high-risk ZIP codes run about 80 percent higher than in lower-risk areas. And the trend is moving in the wrong direction: nonrenewal rates climbed faster in high-risk zones than low-risk ones over the study period, suggesting that coverage is becoming progressively harder to obtain in the areas that need it most.
The FIO report analyzed policies at the ZIP code level, aggregating data from more than 330 insurers. It is the first time federal officials have produced this kind of granular, nationwide picture of where insurance costs and availability are diverging by climate exposure.
Average homeowners’ insurance premiums rose 8.7 percent faster than inflation between 2018 and 2022, according to the Treasury data. That national figure masks a wide variation. In ZIP codes with the highest expected annual losses from climate-related perils, insurers paid out claims averaging around $24,000 per event, about 26 percent more than the $19,000 average in the lowest-risk areas. That difference in claims severity is a core driver of the widening premium disparity.
The paid loss ratio, the share of premiums that insurers paid back in claims, was highest in the riskiest ZIP codes. In plain terms, insurers are collecting more money and paying out more money in exactly the places where homeowners have the fewest alternatives.
The timing of the release is notable. Treasury published the report as Los Angeles was still in the early recovery phase following the January 2026 wildfires, one of the costliest single wildfire events in California history. California has seen repeated cycles of standard market exits, FAIR Plan enrollment surges, and emergency rate filings over the past several years. The Treasury data, though it covers 2018 to 2022, confirms that the structural dynamics driving those events were already well established before the most recent round of disasters.
Nationally, the picture entering 2026 is more stable than it was in 2023 or 2024. Many insurers regained underwriting profitability after several years of aggressive rate increases, and premium growth slowed meaningfully last year. But the FIO’s data makes clear that stabilization at the national level does not translate evenly across geographies. For homeowners in wildfire corridors, hurricane-prone coastlines, and flood-vulnerable inland zones, the insurance market looks structurally different from it does for homeowners in low-risk areas.
For a homeowner sitting on a renewal notice, the implications of the FIO report are practical: location-specific risk is now baked into pricing more precisely than it was five years ago, and that repricing is not finished. Carriers are increasingly using property-level data, roof age, construction materials, defensible space, and proximity to fire stations to differentiate pricing within ZIP codes, not just across them. Homeowners who have not taken steps to document or improve their risk profile may face disproportionate renewal increases even within areas that appear stable on average. Comparing homeowners’ insurance quotes from multiple carriers before a renewal date remains one of the most reliable ways to surface pricing differences that are not visible until a policy lands in the mail.
What should homeowners do right now? The most actionable response to the FIO data is to treat insurance review as an annual task rather than a set-and-forget item. Policyholders in high-risk areas should review their dwelling coverage limits against current rebuilding costs, which remain elevated from prior years of material and labor inflation. Those who have made mitigation improvements, such as a new roof, upgraded electrical, and brush clearing, should notify their insurer and ask whether those changes qualify for a discount or better tier. Homeowners who receive a nonrenewal notice have more options than they may realize, including surplus lines carriers, state FAIR plans, and regional insurers that have entered markets vacated by larger national carriers. Checking the full range of available best homeowners insurance options, including those outside the standard market, has become increasingly important in high-risk states.
The Treasury data will now be available at the ZIP code level for areas with at least ten insurers and 50 policies, giving researchers, regulators, and policymakers a baseline to measure how market conditions change going forward. The FIO plans to update the dataset, and subsequent reports will likely track whether the coverage gap continues to widen or whether recent legislative and regulatory interventions, in California, Florida, Louisiana, and elsewhere, are producing measurable results. For homeowners in high-risk areas, the answer to that question will matter more than the national trend line.
