These 2026 insights are from Jason Rosenthal of the law firm, Much;
Whether you believe in climate change or not, its impact on insurance premiums is real. With a proliferation of natural disasters, whether perceived or real, and whether due to climate change or otherwise, insurance companies are taking notice, and taking action. Many insurance companies have decided to stop underwriting policies, particularly in states like Florida and California.
Insurance companies are tightening (really broadening) exclusions to account for certain climate-related disasters. They are also adding new exclusions, such as an exclusion for extreme fluctuations in temperature. Other insurers are including more express exclusions that preclude coverage for losses “directly or indirectly caused by climate change.” This exclusion will undoubtedly be the source of litigation if and when it is invoked. And as natural disasters continue to occur, even standard exclusions may be the source of litigation, as insurers try to apply them to certain types of climate change-related losses.
To address the difficulties in policyholders’ ability to adequately insure their property, which include both skyrocketing premiums and an unwillingness to even issue coverage, certain states are taking action. For example, in the wake of recent wildfire losses, California required insurance companies to advance payments on certain losses. While insurance is, for the most part, regulated on a state-by-state basis, some federal lawmakers have also proposed legislation that would create a reinsurance program in the event of a catastrophic disaster, and would require participating insurance companies to provide coverage for natural disasters.
Most people never think a natural disaster will affect them, and if they are reviewing their insurance policy after one has occurred and caused a loss, it may be too late at that point. Policyholders, particularly those that live in high risk areas, should be reviewing their coverage with natural disasters in mind when they place the coverage.
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