As air pollution drives up the Earth's temperature and the climate gets less stable, natural disasters increase. Typically, we think of this impacting the coasts, with hurricanes and wildfires intensifying and leading to severe property damage. But even the Midwest is feeling the effects, according to a new study on Illinois home insurance costs from LendingTree, Crain's Chicago Business reported.

What's happening?

LendingTree examined the period from 2019 to 2024 using a hypothetical home worth $400,000 and a $1,000 deductible. Using those parameters, insurance rates in Illinois jumped by almost 60% in six years, making it the seventh-fastest-growing state in the nation, well above the 40.4% national average.

"Insurance companies have been raising their rates to keep up with their escalating expenses," LendingTree home insurance expert Rob Bhatt said, per Crain's Chicago Business. "The early 2020s saw an uptick in natural disasters and inflation. Insurance companies have had to rebuild more homes than normal, and the cost of rebuilding each one has become more expensive."

That leaves the actual price slightly below the national average. As of 2024, coverage for the study's hypothetical house would cost $2,743. But in a region of the country that was once significantly cheaper to insure thanks to the low risk in the area, the price now stands out as a glaring problem.

"Most people have always looked to the central United States as a good place to do business because we do not have hurricanes and firestorms that California and Florida and other places have," said Kevin Martin, executive director of the nonprofit Illinois Insurance Association, per Crain's Chicago Business. "But here in the Midwest recently, it is the tornadoes, the hail, severe winds [that] cause lots and lots of losses, and it is reflected in what the companies are trying to get back in rates."

Why is this price increase important?

The more insurance prices increase, the harder it is for everyday Americans to afford them. Some people may have to tighten their belts or make the difficult choice of risking losing their homes by forgoing insurance. Some people may be unable to purchase the homes they want if they're unable to secure coverage.

This situation is likely to worsen as the world gets hotter and the climate gets less stable. Already, two-thirds of Americans have seen their home insurance rates increase.

What's being done about insurance rate hikes?

In Illinois, regulators only need to be informed about changes to insurance rates; they don't have the power to place caps on the price hikes. But the state Legislature is working on a bill that would allow officials to curb the price increases and give homeowners some relief.

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