These U.S. states push to make polluters pay for rising climate disaster insurance costs

California, Hawaii, and New York propose legal action

California, Hawaii, and New York introduced measures in 2025–2026 letting attorneys general sue fossil fuel firms over rising insurance costs. The plans target companies worth $500 million or more and aim to recover funds for residents facing higher premiums.

Lawmakers say climate-driven extreme weather is pushing insurance prices higher across several states. The proposals would allow states to seek compensation from major polluters, described as the top contributors to global warming.

Funds recovered in court could help cover higher insurance premiums for residents and support state insurance safety net programs.

California says home insurance costs are now a crisis

California lawmakers say insurance prices have become a major financial issue for residents. State senator Scott Wiener said the cost of home insurance in California is now an “absolute crisis” as disasters become more severe.

The concern grew after the January 2025 Los Angeles area wildfires destroyed more than 18,000 homes and properties. Many residents faced sharp premium increases and widespread policy non-renewals.

Thousands of homeowners also reported delayed or denied claims after the fires. Lawmakers say the proposal aims to prevent residents and small businesses from carrying the financial burden alone.

Los Angeles wildfires caused massive losses

The January 2025 wildfires in the Los Angeles area destroyed more than 18,000 homes and properties. The disaster triggered sharp increases in insurance premiums and caused coverage disruptions.

Some residents reported that their policies did not match the real value of their homes. This left major financial gaps after properties were destroyed.

Survivors described the fires as life-changing events that left families without adequate financial protection, even when they had insurance in place.

New York insurance premiums rose 19 percent statewide

Insurance rates in New York increased 19 percent statewide between 2018 and 2025. Lawmakers say the rise is linked to more frequent and severe weather events.

Some areas saw even sharper increases. Insurance premiums for multifamily homes in Brooklyn more than doubled between 2020 and 2023, according to real estate data company Yardi Matrix.

State Senator Brian Kavanagh introduced legislation in November 2025 to allow lawsuits against fossil fuel companies to help offset those rising costs.

Hawaii claims topped 2.3 billion after Maui fires

Hawaii experienced major insurance losses after the 2023 Maui wildfires. The blazes generated more than $2.3 billion in insurance claims.

Following the fires, some homeowners saw premiums rise by as much as 50 percent year over year. Condominium residents faced even larger increases.

State senator Jarrett Keohokalole said some insurers dropped policyholders and left the state because of rising disaster costs.

Some insurers have left high-risk areas

In Hawaii and parts of California, some insurance companies have stopped offering policies after repeated disasters. Lawmakers say insurers left due to the growing cost of claims.

Officials report that insurers “packed up and left” certain markets after major disasters. This left many homeowners with fewer options for coverage.

The proposals aim to recover money from fossil fuel companies to stabilize insurance markets and reduce pressure on residents.

Laws target large fossil fuel companies only

The proposed measures would apply only to fossil fuel companies worth at least $500 million. Companies must also do business within the state to be subject to lawsuits.

Lawmakers say the threshold focuses the legal effort on the largest polluters. The goal is to seek compensation from companies seen as major contributors to global warming.

Recovered funds could be used to offset rising insurance premiums for residents and support state insurance programs.

State insurance safety nets could receive funds

Each proposal would allow funds from lawsuits to support state Fair Access to Insurance Requirements plans. These programs provide coverage to people who cannot obtain insurance in the private market.

Fair plans are funded collectively by private insurers and serve as a last resort option for many homeowners. Lawmakers say they are under growing financial pressure.

Allowing the plans to receive compensation from lawsuits could help cover losses and stabilize the system.

California Fair Plan reliance jumped 500 percent

California’s Fair Plan has seen a sharp increase in use. Reliance on the program grew 500 percent in less than 10 years as insurers dropped policyholders.

Officials warn the plan could become overextended as more homeowners depend on it. The program expects to pay about $4 billion in losses from the January 2025 Los Angeles wildfires.

To cover those losses, the state asked the insurers that fund the program for $1 billion, with half of those costs potentially passed to customers through higher rates.

California bill includes home fire proofing funds

The California proposal includes an additional use for recovered funds. Money from lawsuits could help finance programs to fireproof low and middle-income homes.

Lawmakers say prevention could reduce losses and insurance costs over time. The measure links compensation from polluters to projects that lower future disaster risk.

This approach aims to address both immediate premium increases and long-term resilience needs.

Some states may let insurers sue after disasters

The Hawaii and New York proposals include a legal right for insurance companies to sue fossil fuel firms after climate disasters. This provision is not part of the California bill.

Lawmakers say this could help insurers recover some disaster-related losses. The goal is to reduce the pressure that drives premium increases for customers. Supporters argue the change could stabilize insurance markets after major storms, fires, or floods.

Oil industry groups oppose the proposals

Oil industry trade groups have pushed back against the measures. The American Petroleum Institute said the bills unfairly target an industry that powers the economy and is reducing emissions.

Industry representatives argue that retroactively penalizing companies for meeting consumer demand could set a dangerous precedent. They also say the proposals could hurt jobs and raise costs.

The Western States Petroleum Association also opposed the California bill, calling it harmful to affordability.

Wondering what’s behind the federal block on trucker licenses? Discover why the state’s plan is being challenged.

Climate lawsuits are growing across the US

Legal efforts to hold fossil fuel companies accountable are expanding nationwide. Seventy states and local governments have already sued major oil companies over climate-related claims.

Vermont and New York recently passed climate superfund laws requiring large oil companies to help pay for climate adaptation efforts. Similar proposals have appeared in California and New Jersey.

In December 2025, two homeowners in Washington filed a lawsuit against oil companies over rising insurance premiums, marking a new approach to climate-related legal action.

Curious why the federal government is challenging these gas bans? Take a closer look at the legal fight in California.

Do you support holding companies responsible for climate damages? Share your view in the comments and like the post.

This slideshow was made with AI assistance and human editing.

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