Severe Thunderstorms Inflicted $82 Billion in Damage Last Year, Making Them More Costly Than Hurricanes

Severe convective storms—a type of thunderstorm caused by warm air rising quickly in the atmosphere—led to approximately $82 billion in global economic losses in 2025—nearly three-quarters of which was in the United States.

These storms, which may include hail, lightning, strong winds, or tornadoes, accounted for nearly one-third of all natural catastrophe losses around the world, overtaking tropical storms for the first time in decades, according to a new report from climate science research firm First Street.

First Street found that while hurricanes and earthquakes may typically dominate headlines, severe convective storms inflict continuous, cumulative damage and are quickly becoming a major factor in rising insurance premiums.

According to a research report from risk management firm Aon, material losses from severe convective storms have surged by a staggering 6.8% annually, while weather-related losses overall have grown at a rate of 2.7% annually since 2000. Over the last 25 years, severe convective storms have accounted for around $794 billion in insurance claims—more than flooding, droughts, and earthquakes combined.

Yet, "we're not seeing the huge reserves built around severe convective storms in the same way that we are around primary perils like wind, flood, and fire," said First Street Chief Economist Jeremy Porter, Ph.D., during a recent webinar on severe convective storm loss.

Rising temperatures have led to more severe convective storms

Climate change has been a leading factor in the rapid acceleration of these storms. As global temperatures rise, the atmosphere holds more moisture. According to Ed Kearns, First Street’s chief science officer, every degree Celsius of temperature increase allows the air to hold 7% more water vapor.

"As the atmosphere warms with climate, you have more water vapor. As you have more water vapor rising aloft, you have more energy for these kinds of storms," he explains.

That's led to more severe storms, including more frequent and more damaging hail storms.

A 2025 hail storm in New South Wales and Queensland, Australia, led to more than $1.3 billion in insurance losses. The storm impacted 22,000 hectares of land and caused 100% crop loss on some farms. Eyewitnesses reported 2- to 3-inch hailstones in some areas.

Kearns warned that the highest-risk areas for hail in the U.S. are Texas, Illinois, and Ohio, where potential losses could top $5 trillion.

When it comes to wind-related storm risk, New York, Texas, Illinois, and Pennsylvania topped the list. In most cases, wind and hailstorms are covered by standard homeowners insurance policies, but 19 states actually require windstorm deductibles that must be met before coverage kicks in.

The increase in these storms "impacts homeowners, impacts business owners, impacts supply chains and affects how we think about revenue generation. And so there are a lot of different ways in which severe convective storms make their way into these insured losses," says Porter.

"Insurers at this point haven't pulled out from the severe convective storm market in the same way that they have maybe from the wildfire market in the western U.S., for instance, or in the tropical cyclone and wind market in the Gulf," he notes, adding that the insurance market would likely soon reach its breaking point and that homeowners should brace for a future where "deductibles will increase ... and the availability of insurance as a risk-transfer mechanism is likely to decrease in some of these areas."

Regardless of if and when severe convective storms are reclassified as primary perils, they are still having an outsized effect on the insurance market.

"They do work their way into the insurance repricing and reduce capacity. And this is particularly the case in a hard insurance market which we saw from 2017 to about 2024 in which competitive pricing of insurance decreased," Porter says.

That led to insurers either raising deductibles in risk-prone areas or no longer offering insurance to homeowners in high-risk markets entirely.

What homeowners can do about severe convective storms

The Realtor.com® 2026 Housing and Climate Risk Report found that 23.1% of U.S. homes face severe or extreme climate risk from wind, flood, or wildfire, representing $11.2 trillion in exposure.

Despite increased and elevated risks, many homeowners have been forced to drop their insurance coverage, or have been denied insurance coverage because of the risk factors associated with their home's location.

If you're looking to buy a home or protect your current property, climate risk should be part of your research. Before purchasing, look into the specific wind and hail history of the locality, and review the property's Environmental Risk score, which evaluates a home's flood, heat, wind, fire, and air quality risk level.

If you already own a home in a high-risk area, investing in proactive adaptations (like impact-resistant roofing shingles or reinforced garage doors) could save tens of thousands of dollars down the road.