We study the medium-run effects of a major climate shock on insurance demand and subjective well-being. Exploiting quasi-random exposure to storm Gudrun (Sweden, 2005) and conditioning on satellite-based forest and terrain characteristics, we treat realized damages as conditionally exogenous. Three years after the event, affected forest owners exhibit a persistent increase in insurance take-up alongside significant welfare losses. These losses are economically meaningful and consistent with important non-pecuniary and psychological costs, including landscape damage and heightened insecurity. Insurance provides only limited welfare buffering, operating partly as reassurance rather than full compensation. Overall, the results highlight the limits of climate insurance as a stand-alone adaptation tool.