From California to Florida, homeowners have been facing a new climate reality: Insurance companies don’t want to cover their properties. According to a report released today, the problem will only get worse.

The nonprofit climate research firm First Street Foundation found that, while about 6.8 million properties nationwide already rely on expensive public insurance programs, that’s only a fraction of 39 million across the country that face similar conditions.

“There’s this climate insurance bubble out there,” said Jeremy Porter, the head of climate implications at First Street and a contributor to the report. “And you can quantify it.”

Each state regulates its insurance market, and some limit how much companies can raise rates in a given year. In California, for example, anything more than a 7 percent hike requires a public hearing. According to First Street, such policies have meant premiums don’t always accurately reflect risk, especially as climate change exacerbates natural disasters.

This has led companies such as Allstate, State Farm, Nationwide, and others to pull out of areas with a high threat of wildfire, floods, and storms. In the Southern California city of San Bernardino, for example, non-renewals jumped 774 percent between 2015 and 2021. When that happens, homeowners often must enroll in a government-run insurance-of-last-resort program where premiums can cost thousands of dollars more per year.

“The report shows that actuarially sound pricing is going to make it unaffordable to live in certain places as climate impacts emerge,” said David Russell, a professor of insurance and finance at California State University Northridge. He did not contribute to the report. “It’s startling and it’s very well documented.”

Read the full article about climate risks for home insurance by Tik Root at Grist.