The news: States are taking different legal approaches as climate disasters strain insurance markets. A New York bill would let the state attorney general sue fossil fuel companies when climate-linked disasters drive up residential property insurance premiums. Meanwhile, Hawaii passed a resolution encouraging property insurers to pursue subrogation claims against oil and gas companies for climate-related losses.

Trendspotting: At the same time, states are expanding public insurance backstops as private insurers pull back:

• Following the January 2025 Los Angeles wildfires, California has reformed its backstop fire insurance program to help finance its claims costs as private insurers reduce coverage or withdraw entirely from the market.
• Hawaii has expanded coverage through the Hawaii Property Insurance Association, reactivated the Hawaii Hurricane Relief Fund as the insurer of last resort for hurricane-related perils, and established a loan program to help condos stay insured.
• Florida homeowners, squeezed by hurricane-driven premium increases and limited options for home coverage, have been turning to the state’s public insurer. Florida made major changes to property insurance laws in 2025 in part to reduce the burden on that program.

Zoom out: The push to hold fossil fuel companies accountable has been building. In 2023, California sued major oil and gas companies, seeking to establish an industry-financed recovery fund for storm and wildfire damage. In December 2025, Washington homeowners sued oil and gas companies over premium increases.

Meanwhile, insurers face pressure from policyholders too. Consumers have sued carriers, alleging underpayment or improper denial of claims over climate-related damages. And the average annual cost of homeowners insurance in the US has reached nearly $2,370, a 70% increase since late 2019, outpacing increases in home prices, mortgage rates, and property taxes.

Implications for insurers: The climate crisis is squeezing insurers as weather-related catastrophe losses rise. Carriers are often forced to raise premiums, increase deductibles, and restrict coverage. And some face their own legal challenges. Lawsuits, no matter the defendants, draw unwanted attention to the cost of property insurance and reductions in coverage.

Insurers must address their costs by collaborating with regulators and developers to reduce the severity of catastrophe losses. They should also mitigate potential conflict with policyholders: Clear, proactive communication about how pricing reflects risk and transparent claims processes will build trust—which is on thin ice.