What do you do if your home is suddenly “unsuitable collateral”?
One solution: Sue the bastards.
As climate disasters drive up the price of home insurance, three US states are considering empowering their state prosecutors to sue major polluters for their role in those rising costs.
Lawmakers in California, Hawaii and New York have introduced measures which would authorize their attorneys general to sue fossil fuel companies on behalf of residents whose insurance premiums have soared amid climate disasters.
“The cost of home insurance in California is an absolute crisis,” said state senator Scott Wiener, lead author of his state’s bill, speaking at a press conference announcing the measure on Thursday. “We know that the years ahead are going to be dramatically more dangerous, tragically, when it comes to climate disasters, and we can’t allow Californians, our residents, our small businesses, to be left holding the bag.”
The proposals aim to hold the fossil fuel industry, the top contributor to global warming, accountable for soaring insurance rates driven by climate-fueled extreme weather.
In California, after the deadly 2025 Los Angeles-area wildfires, which destroyed more than 18,000 homes and properties, residents faced massive insurance premium increases, as well as widespread non-renewals of insurance and thousands of delayed or denied claims.
“We became refugees overnight,” Rasheed Ali, who lost his Altadena, California, home in the Eaton fire last January, said at the Thursday press conference announcing Wiener’s initiative. “We had insurance, but insurance didn’t mean we were protected. Our policy was bought decades ago, never adjusted to reflect the real value of our home, which leaves a massive financial gap that we are struggling to fill.”
In New York, where state senator Brian Kavanagh introduced a bill in November 2025, insurance premiums have also steadily risen amid increasingly extreme weather, with rates up 19% statewide since 2018. Some regions have seen even greater increases: multifamily homes in Brooklyn have seen insurance premiums more than double from 2020 to 2023, according to figures from real estate data company Yardi Matrix.
As the prospect of flood damage haunts an ever larger number of UK homes, the country’s banks are under growing pressure to prove they’re not underestimating the risk in their mortgage books.
Nationwide Building Society — once seen as an outlier after saying in 2024 it had stopped making loans to some homes at risk of flooding — has emerged as a prescient first-mover amid growing banker anxiety, according to Mark Cunningham, managing director at PriceHubble, a property data company.
The risk is that a bank is “going to end up with mortgage prisoners” if it’s the only institution “lending to stuff which everyone else says is flooding,” Cunningham says. As a bank in that scenario, “you’re stuffed, and your customers aren’t going to be able to re-mortgage.”
In England, there are already 6.3 million properties in areas at risk of flooding from surface water, coastal swells and overflowing rivers, according to the government’s Environment Agency. At the same time, more properties are being built on flood-prone land, with the insurer Aviva estimating that roughly 11% of new homes built between 2022 and 2024 are in areas facing medium to high flood risks, compared to 8% over the previous decade.
Adair Turner, the former head of the UK’s banking regulator and current non-executive chairman of insurance group Chubb Ltd.’s European business, says there’s still a fundamental “asymmetry” between how banks and insurers are approaching the issue of flood damage. And that creates “a very significant risk for the banks,” he said in an interview.
The new reality is largely down to climate change, exacerbated by urban landscapes that often prevent excess water from draining away. This year, floods have already wreaked havoc in Britain’s southwest, with Cornwall experiencing its wettest January on record.
The development threatens to upend the dynamics around real estate in Britain, not just environmentally but also financially. Banks risk seeing property values take a hit as the homes they’re financing get damaged in more frequent and destructive floods. Homeowners affected by floods, meanwhile, often get inundated by additional costs that make it harder for them to meet mortgage payments.
UK banks are already trying to identify the corners of their loan portfolios that are most at risk. Barclays Plc says 2.6% of its UK mortgage book is in areas of high flood risk, with a further 1.2% in the very high risk band. And an expected increase in flooding in the coming years “has the potential to impact the valuation of properties directly, as well as indirectly, where areas may become high risk and property demand falls,” Barclays said on Feb. 10.
NatWest Group Plc says 3.4% of assessed UK home loans — including those provided via its private banking division — are already at high flood risk, with a further 1.3% at very high risk. It limits loans for flats, new builds and buy-to-let properties at high or very high risk of flooding, and says it “continually” reviews its lending policies to reflect new flood-risk data.
Lloyds Banking Group plc, Britain’s biggest mortgage provider, saysone in six properties on its books is at risk of flooding, with climate change set to raise the likelihood and severity of flood events. Lloyds already conducts physical inspections of properties exposed to increased flood risk, and won’t provide mortgages if a property is found to be “unsuitable collateral,” the bank said this month.
As memories of the mortgage market collapse fades, banks have gotten used to mortgages as their big money-makers again.