Homeowners Sue Oil Companies as Climate Damage Drives up Insurance Rates

Two homeowners in Washington state who have seen sharp increases in their home insurance premiums in recent years have brought a new lawsuit against major oil and gas companies—the first of its kind aiming to hold Big Oil responsible for climate-related spikes in insurance costs. 

The case, filed last week in U.S. District Court in the state’s Western District, alleges that deception and fraud on the part of oil industry defendants around the impacts of fossil fuels on climate has substantially contributed to the climate crisis, which in turn has resulted in a homeowners’ insurance crisis as rates soar and access in especially high-risk areas starts to decline. 

In Washington state, for example, homeowners’ insurance rates have risen by 51 percent over the last six years. 

For Richard Kennedy, a resident of the Seattle suburb of Normandy Park, premiums have more than doubled since 2017, rising from $1,012 to $2,149. Margaret Hazard, who resides in Carson, Washington, has similarly experienced a doubling in her homeowners’ insurance premiums over the last eight years. They are now turning to the courts, filing a class action on behalf of all homeowners who have or will purchase insurance after the year 2017 in both that state and nationwide.

Climate change, which is supercharging damaging extreme weather such as hurricanes, flooding and wildfires, is a key factor driving rising home insurance rates. As climate-related disasters and their associated costs mount, homeowners’ insurance is becoming costlier and harder to obtain, according to a January report from the Department of the Treasury’s Federal Insurance Office. The report found that average home insurance premiums increased nearly 9 percent faster than the rate of inflation from 2018 to 2022. 

The lawsuit, Kennedy v. Exxon et al., is the first to target fossil fuel companies over these skyrocketing insurance costs. “This case is about holding the fossil fuel defendants accountable for the increased homeowners’ insurance premiums that their coordinated and deliberate scheme to hide the truth about climate change and the effects of burning fossil fuels has brought about and for their conduct contributing to climate change,” the complaint asserts. 

The suit brings both federal and state law claims. The federal claims include violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act. State law claims include fraudulent misrepresentation, civil conspiracy, unjust enrichment, nuisance and violation of the Washington Consumer Protection Act. Like other climate cases brought against big oil companies, it argues that defendants engaged in a decades-long campaign of deception to deny the links between fossil fuels and climate change, and more recently to misleadingly portray the oil industry as providing climate solutions, all for the purpose of delaying the transition to clean energy and protecting industry profits. 

The suit names ExxonMobil, BP, Chevron, ConocoPhillips, Shell and its subsidiary Equilon Enterprises and the U.S. oil and gas industry’s chief trade association, the American Petroleum Institute (API), as defendants, noting that the companies have collectively generated $2.4 trillion in profits since 1990. 

In an emailed statement, API senior vice president and general counsel Ryan Meyers called the lawsuit “baseless” and part of a “coordinated campaign against an industry that powers everyday life, drives America’s economy, and is actively reducing emissions.” 

“We continue to believe that climate policy belongs in Congress, not a patchwork of courtrooms,” Meyers added. 

API has long been one of the most powerful forces lobbying against climate policies and legislation in Congress. 

Inside Climate News reached out to BP, Chevron, ConocoPhillips, ExxonMobil and Shell for comment but did not get a response. 

The lead law firm representing the plaintiffs, Hagens Berman Sobol Shapiro LLP, has previously worked on litigation against the tobacco industry, with co-founder and managing partner Steve Berman serving as special assistant attorney general for 13 states in the tobacco litigation. 

Berman said the oil industry has followed the same pattern of deception that tobacco companies used. “Big Oil took its playbook directly from the minds of Big Tobacco and think they can get away with the same deliberate disinformation campaign, coercing the public to pay for the very harms they suffer,” Berman said in a statement. 

U.S. Sen. Sheldon Whitehouse (D-R.I.) has also highlighted the striking similarities between the two industries in terms of deceptive conduct, and has been a leading voice in Congress speaking out about both the climate-fueled crisis in the home insurance market and the role of the fossil fuel industry in bringing about these costly consequences. 

“Higher insurance premiums are the result of the fossil fuel industry’s decades-long campaign of disinformation to obstruct climate action,” Whitehouse told Inside Climate News in an emailed statement. “We are already seeing signs of the Great Climate Insurance Collapse, which will cascade into a collapse in property values that will trash our entire economy. Just like Big Tobacco, Big Oil has lied for decades to the American people about the full extent of the harms of its products and must be held accountable.”

In a 118-page complaint, the new lawsuit lays out examples of how the industry’s conduct has undermined public understanding of climate science, obstructed climate policies and ultimately delayed the transition to clean energy, thereby directly contributing to what scientists say has now become a climate emergency. And with extreme weather disasters on the rise as climate change accelerates, insurance companies are having to cover significantly more losses and account for much greater risk, leading to sharp rate increases. 

“We see a direct correlation between Big Oil’s lies and the alarming increase of homeowners insurance due to the rising threat of natural disasters,” Berman said in his statement. 

Michael Gerrard, faculty director of the Sabin Center for Climate Change Law at Columbia University, told Inside Climate News that it will be “challenging to quantify the effect that climate deception is having on the physical impacts of climate change.” But he said it is clear that climate change is “leading to higher insurance premiums, and that’s costing homeowners real money.”

“Insurance really is the bleeding edge right now of the climate crisis,” said Aaron Regunberg, director of Public Citizen’s climate accountability project. “Having litigation strategies that are taking that on is extremely important.” 

Pat Parenteau, emeritus professor of law at Vermont Law and Graduate School, told Inside Climate News that the new case “opens yet another front on the battle to hold the oil companies accountable for the damage they continue to cause to consumers and communities across the country.” 

“Climate breakdown is causing a cascade of disasters, including an insurance crisis that threatens another financial meltdown as occurred with the subprime mortgage collapse in 2007-08. When people can’t get insurance, they can’t get a mortgage, property values fall and defaults escalate until the bubble bursts,” Parenteau explained. “So, the damages are real and provable.”

The new lawsuit comes as major oil and gas companies are facing a rising tide of climate accountability lawsuits brought by cities, counties, states, tribal governments and individuals. In May, a woman in Washington state whose mother died in the 2021 Pacific Northwest heat dome brought a first-of-its-kind wrongful death suit against Big Oil. 

In September the U.S. District Court in Puerto Rico dismissed a similar class-action lawsuit filed by Puerto Rican municipalities that had also brought federal racketeering charges against fossil fuel companies, seeking to hold them liable for damages associated with the 2017 hurricanes that decimated the island territory. The dismissal was based on a procedural statute of limitations issue, and the municipalities are appealing the decision. 

Berman told Inside Climate News that he thinks his case will be able to avoid that procedural hurdle. “Since this is a newly caused harm, we believe the statute of limitations does not apply in this case,” he said. 

Still, the industry and its political allies are going all out to try to stop these cases in their tracks. Oil companies are currently petitioning the U.S. Supreme Court to intervene in a climate deception case brought by Boulder, Colorado. If the justices take up the petition, it could have sweeping repercussions for the more than two dozen other climate cases pending against the industry. The court is scheduled to address the petition during its Dec. 12 conference. 

“It’s a hold-your-breath moment for all of these cases,” Parenteau said.