From shoe-melting 116-degree weather in Las Vegas to sudden flash floods in New York City and Chicago, extreme weather caused record-breaking damage in 2023. Media headlines often focus on the billions of dollars lost due to property damage from flooding and wildfires in Florida and California, but climate change is impacting all our wallets in unexpected ways.

Bankrate’s extreme weather survey found that 57 percent of Americans say they have incurred costs due to an extreme weather event over the past 10 years. While 43 percent of adults in the U.S. reported that they have not incurred any expenses due to extreme weather in the past decade, many consumers may be overlooking the hidden costs of extreme weather. Extreme weather events around the globe impact our food prices, insurance rates, energy bills and more.

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Key facts about extreme weather costs
  • Adults with children bear the brunt of sudden expenses from extreme weather. Compared to childfree adults, adults with children under 18 incurred drastically more extreme weather-related costs in almost every category. For example, 10% reported evacuation expenses, and 17% reported medical expenses, while adults without children reported costs at 7% and 11%, respectively. (Bankrate extreme weather survey)
  • Most Americans anticipate the financial repercussions of extreme weather to continue. According to our data, 57% of U.S. adults expect that climate, extreme weather events and the environment will have a negative impact on their finances by 2033. (Bankrate extreme weather survey)
  • Gen X is less optimistic about the future than other generations. At 31%, more Gen Xers expect that climate, extreme weather and the environment will very negatively impact their personal finances over the next 10 years than any other generation. This is compared to 22% each of Boomers and Millennials and 20% of Gen Zers. (Bankrate extreme weather survey)

What is extreme weather?

Extreme weather is a meteorological term describing a weather event that is rare at a specific place or time of year, including severe or unseasonable weather. It is natural for Earth to have extreme weather cycles, but the increase in greenhouse gasses released into Earth’s atmosphere since the Industrial Revolution is causing the planet’s temperature to rise, which increases the frequency and intensity of extreme weather events.

The National Oceanic and Atmospheric Administration (NOAA) tracks climate disasters and their impact on Americans. There have been over 372 billion-dollar weather and climate-related disasters since 1980 that total over $2.63 trillion in damage. The chart below shows how climate and extreme weather disasters have increased in frequency over time, especially in the last five years.

Hidden costs of extreme weather in housing and transportation

The NOAA categorizes the impacts of extreme weather into eight different disaster types: droughts, flooding, freezing, severe storms, tropical cyclones, wildfires and winter storms. Our survey data shows that 20 percent of Americans cited expenses related to property and home damage as a source of extreme weather costs in the past 10 years. While most homeowners and renters insurance policies cover wind and fire damage, drought and the accompanying extreme heat have Americans paying extra out-of-pocket expenses.

Impact for homeowners and renters

The record-breaking heat this summer pushed many household appliances and air conditioning units into overdrive, as 53 percent of Americans say they incurred higher energy costs. The financial burden to the southern U.S. was particularly high, with 59 percent of adults reporting increased energy costs and 28 percent expressing that these increases were a significant strain on their finances.

Homeowners insurance typically covers damage that is sudden and severe, like a house fire or fallen tree on your roof. Heat and drought rapidly increase wear and tear on your home, but wear and tear is specifically excluded from standard home and renters insurance. Aside from peeling paint, shrinking, and cracking wood siding and fencing, extreme heat can intensify mold and termite issues which impacts a home’s structural integrity and air quality for those who live there.

Droughts also cause soil to shrink, potentially leading your home’s foundation to sink, settle and eventually crack. Uneven floors, cracks in interior and exterior walls and doors and windows that don’t shut properly are signs of foundation damage. Not only are foundation repairs from the effects of drought not covered by home insurance, they can impact the market value of your home.

Flooding is also typically excluded from home and renters insurance. For coverage, you must purchase a separate flood insurance policy or endorsement. Climate change is disrupting precipitation cycles, causing historical rainfall in short periods in some areas. When this happens in locations where the soil is less absorbent from droughts, like Black Rock Desert, Nevada, or where stormwater infrastructure is lacking, like Chicago, the results can be devastating.

How you can save
Homeowners can take big and small steps to help reduce energy costs in their homes. Installing heat pumps or investing in alternate sources of energy are major changes, but here are some budget-friendly options that you can implement today:
  • Keep your thermostat a few degrees lower in the winter and higher in the summer
  • Adding weatherstripping to your windows and doors
  • Change your air filters regularly to ensure A/C system efficiency
  • Turn off lights and appliances when not in use
  • Replace light bulbs with energy efficient LEDs

Impact for drivers

Your car insurance should cover sudden damage from extreme weather events as long as you have comprehensive coverage on your car insurance policy. However, if the impacts of extreme weather are not sudden or are not severe enough to warrant filing a claim, you may be out of luck. Extreme heat rapidly degrades tires, windshield wiper blades and paint, all of which cost you money in repairs. Battery and air condition failures are also common during heatwaves.

The cost of car insurance is also on the rise as the frequency and severity of claims increases, so if you live in an area that’s experiencing more extreme weather than in the past, you will likely see your premium go up at renewal.

As climate patterns shift, drivers may see car crashes due to damaged road infrastructure and their ability to maintain control of their vehicles. Dr. Jean-Claude Thill, a geography, public policy and data science fellow of the American Association of Geographers, told Bankrate:

Extreme weather events are most definitely impacting road safety. Whether we are talking about longer and more pronounced snow or ice storms, tornadoes, rain and hail storms, floodings, vehicular mobility is disrupted, and risk of material and human loss is increased by changing the normalcy of conditions expected by drivers. — Dr. Jean-Claude Thill, a geography, public policy and data science fellow of the American Association of Geographers
How you can save
If your auto insurance costs are on the rise, you might be able to mitigate some of these costs by comparing quotes with other carriers, looking for applicable auto insurance discounts and maintaining a clean driving record to avoid rate surcharges.

Hide from wind, run from water: Evacuation expenses

Even if you evacuate to avoid extreme weather, it will likely still cost you—14 percent of adults reported a loss of income in the past 10 years because they could not work due to an extreme weather event. Evacuation expenses are another unspoken expenditure. Parents of children under 18 are most impacted by these costs, with 10 percent reporting expenses related to evacuation compared to 7 percent of adults without children. Our data also revealed generational differences regarding evacuation costs, with 11 percent of Gen Zers being impacted compared to just 3 percent of Boomers.

Evacuation expenses are not covered by home or renters insurance, but depending on the policy and situation, loss of use coverage may pay for your living expenses if your home is uninhabitable while being repaired following a covered loss.

How you can save
If you live in an area likely to have an evacuation due to extreme weather, you might save money on these expenses by planning ahead. Many travel reward cards offer discounts on rental cars, hotels and even dining, and you may be able to redeem points to pay for your evacuation expenses. If you have to leave your home for covered repairs, keep track of all extra expenses so you have documentation if you choose to submit a loss of use claim.

Unseen ripples: The elusive impact of extreme weather on our daily finances

Our homes and cars are likely some of our biggest investments, but what about our daily spending? U.S. commodity export and import containers account for about 73 percent of Panama Canal traffic. The canal is currently experiencing a 10-month shipping backlog due to low water levels. Shipping delays account for some of the increased costs we’re seeing for everyday staples like wheat, canned foods, vegetable oils and petroleum products. With the holidays right around the corner, toys and cell phones will likely cost more and take longer to arrive, along with increases in general shipping costs.

Kate Bulger, the vice president of business development for Money Management International, summarizes how extreme weather can have a ripple effect on our economy:

When a population is impacted by disasters, consumers decrease discretionary spending which affects remaining local businesses. The job market is affected by the reduced spending and the increased number of people trying to find new work. All of this economic pressure makes the entire area less affordable and starts to squeeze out middle income households. — Kate Bulger, VP of business development at Money Management International

The Panama Canal crisis illustrates how one climate challenge can have a widespread ripple effect. For example, lumber is commonly shipped into the U.S. via the Panama Canal. One of the reasons homeowner insurance premiums are increasing across the country is directly tied to the cost and availability of building materials.

When asked about the Panama Canal shipping delays, Dr. Thill advised, “Short of a return to normal precipitation in the Basin that feeds into the Panama Canal, the U.S. economy needs to brace for reduced traffic. This may mean more imports through the West Coast ports, especially Los Angeles and Long Beach, or longer-term, rerouting through the Northwest Passage. Given the fundamental uncertainty of weather patterns brought by climate change, we can expect the Panama Canal to constrain vessel traffic again in the future.”

Impact of extreme weather on food costs

Extreme weather impacts food availability, quality and affordability. Bankrate data shows that parents of children under 18 are impacted the most — 27 percent of parents experienced food spoilage expenses due to extreme weather in the last decade. Thankfully, many homeowners and renters insurance policies have a provision that offers limited coverage for food spoilage depending on how and where the power outage took place.

Food is the third-largest household expense for Americans, so any loss of food or increase in food cost quickly adds up. According to the Bureau of Labor Statistics, food prices increased by 3.7 percent between September 2022 and September 2023.

Inflation also plays a role in rising costs, but climate change is an often overlooked contributor to high prices. For example, extreme heat and drought have caused a massive olive oil shortage in Spain, the main exporter of olive oil, with production predicted to decrease by 30 percent. In the U.S., production of cotton, oranges and tomatoes are also down due to extreme weather in Texas, Florida and California.

Dr. Thill adds, “Chocolate lovers may have noticed the price of their favorite treat has gone up tremendously over the past year. This can be traced to unstable weather conditions resulting in poor cocoa crops in West Africa, where much of the cocoa we consume is grown.”

How you can save
Shopping seasonally and supporting local farms can help reduce your carbon footprint and support your local community. If you have the space, try creating a hobby farm in your neighborhood where you and your neighbors can swap fruits and vegetables. If you don’t track and budget food expenses, now may be a great time to start. A meticulous budget can help you see where you might be able to save on food costs.

Impact of extreme weather on clothing costs

Bankrate’s social media impulse buy survey showed that 48 percent of U.S. adults report making impulse purchases on social media between August 2022 and August 2023. Fast fashion retailers thrive on social media sales, but mass-produced pieces need to be replaced often and are made in facilities with poor working conditions and heavy pollutant production.

According to The World Bank, the fashion industry is responsible for 10 percent of annual global carbon emissions and annually uses 93 trillion liters of water. To put that into perspective, it takes 3,781 liters of water to produce one pair of jeans.

This puts budget minded consumers in a quandary—is saving money on cheap clothing today worth the future cost? Unfortunately, extreme weather is driving up the cost of clothing, making it more difficult for many consumers to invest in a sustainable wardrobe. Ethical fashion choices tend to cost much more than standard clothing. Cotton prices increased 45 percent in 2023, and the price might not come down anytime soon.

How you can save
Thrifting is an economical and sustainable way to purchase unique clothes and furniture without paying full price. Learning how to repair small holes and rips can also help extend the life of your clothing. Choosing to wait a day or two before making a purchase can also help you avoid impulse buys.

The bottom line

Unfortunately, we’re all experiencing the effects of extreme weather — whether we know it or not. Implementing cost-saving, climate-friendly switches, like making your home more energy efficient, can help save you money and manage feelings of climate anxiety.

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Bankrate commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc.

Extreme Weather Survey: Total sample size was 2,302 US adults. Fieldwork was undertaken between August 29-31, 2023.

Social Media Impulse Purchase Survey: Total sample size was 3,607 U.S. adults, of which 3,304 are members of at least one social media platform. Fieldwork was undertaken between August 16-20, 2023.

The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.