Home insurance premiums have quietly become one of the biggest obstacles to housing affordability in America.
After years of steady increases, insurance now accounts for 9% of the typical homeowner’s monthly payment—the highest share on record.
And with premiums projected to rise another 8% in both 2026 and 2027, the crisis is far from over.
Eight Things to Know Right Up Front
- Home insurance premiums in the U.S. increased by around 24% between 2021 and 2024, outpacing inflation by 11%.
- Insurance now represents 9% of the typical U.S. homeowner’s monthly mortgage payment—an all-time high.
- Premiums are projected to rise by 8% in 2026 and another 8% in 2027, significantly increasing overall insurance costs.
- In 2023, insurers paid out $1.11 in claims for every $1.00 earned in premiums—losing money on homeowners insurance.
- Climate-driven losses have surged since the 1980s. In 2025 alone, severe storms caused over $60 billion in global insured losses.
- California’s FAIR Plan now covers over 451,000 policies and is seeking a 36% rate increase following the Los Angeles wildfires.
- Florida’s reforms have stabilized that market, with Citizens Insurance dropping from 1.4 million policies to under 400,000.
- Other states are feeling it. The “insurance protection gap” has spread to states like Colorado and Georgia as climate risks outpace underwriting models.
What Else You’ll Find in This Report
- Three reasons why costs are rising
- How this trend affects homeowners
- How it could affect home buyers
- Insurance predictions for the next 5 years
- What’s being done about the problem
Insurance Premiums Rising Faster in 2026
Between 2021 and 2024, the average U.S. home insurance premium increased 24%—outpacing inflation by 11%. While premium growth slowed to 8.5% in 2025 (down from 18% in 2024), these annual increases remain far above the historical norms of 3-5%.
Looking ahead, analysts project 8% increases in both 2026 and 2027. Over five years from 2019 through 2024, premiums from major insurers increased by an average of 53%.
Geographic variations are dramatic. Nebraska, Montana, and Iowa saw increases above 20% in 2024. Meanwhile, 34 states experienced double-digit premium increases. Nationwide, home insurance rates have increased by more than 44% since 2019.
The Top 3 Reasons Why Costs Are Rising
The rise in insurance premiums results from a perfect storm of overlapping factors.
1. Climate Change and Catastrophic Losses
According to some sources, natural disaster losses have increased tenfold since the 1980s.
In 2023, insurance companies in the U.S. paid out about $1.11 in claims and expenses for every $1.00 earned in premiums—the worst ratio since 2011. They were literally losing money on home insurance policies.
Severe convective storms (like hail, tornadoes, and straight-line winds) have become the top peril nationwide, causing $42 billion in insured losses as of late 2025.
The January 2025 Los Angeles wildfires resulted in an estimated $4 billion in losses for California’s FAIR Plan. Hurricane Milton caused $3.62 billion in residential losses in Florida.
This isn’t a blip on the radar. Climate scientists project that extreme weather events will continue intensifying. Wildfire seasons are extending. Hurricane intensification is accelerating.
These trends point to structural, long-term changes rather than cyclical fluctuations.
2. Reinsurance Cost Increases
Reinsurance is basically insurance for insurance companies, and it directly affects how much homeowners have to pay for their own coverage.
When catastrophes overwhelm an insurer’s capacity, reinsurance provides backup funding.
The global reinsurance market experienced dramatic price increases from 2022 through early 2024, following years of large catastrophe losses. When reinsurers raise rates, those costs flow directly through to homeowner premiums.
Since then, reinsurance prices have eased a bit in some of the lower-risk parts of the U.S. But they remain high in the more disaster-prone coastal areas and wildfire zones, making homeowners insurance more expensive for residents in those areas.
For homeowners, the key point is that reinsurance operates globally. Even if your area hasn’t experienced recent disasters, you’re affected by catastrophic losses worldwide as reinsurers price for overall portfolio risk.
In other words: homeowners nationwide are paying higher prices for coverage, due to more severe risks in certain parts of the U.S.
3. Construction Cost Inflation
Replacement costs for homes have increased steadily in recent years, and this in turn has increased the cost for insuringhomes.
Labor shortages in construction trades persist, driving up wages and project costs. Meanwhile, the cost of common building materials like aluminum, lumber, and copper remain elevated.
This creates a kind of feedback loop.
As replacement costs rise, insurers must charge higher premiums for coverage. Even homeowners who never file claims pay more because the insurer’s potential liability has increased proportionally.
Other Contributing Factors
While the three drivers mentioned above play the biggest role, other factors can influence costs in specific markets. These include:
- Stricter underwriting requirements, particularly for roof age and condition.
- Insurance fraud, which adds hundreds of dollars annually to the average family’s premiums.
- Higher deductibles, shifting more upfront costs to policyholders.
- Increased litigation costs in certain states like Florida.
- Regional regulatory constraints that create market instability in states like California and New Jersey.
Bottom line: Rising premiums don’t come from a single cause. They’re the result of escalating risks, mounting losses, and market pressures that show no signs of reversing course.
How This Affects Current Homeowners
For existing homeowners across the U.S., these premium increases create budget pressures and force difficult decisions about coverage levels and risk management.
Monthly payment shock: A 54% majority of homeowners reported premium increases in the past 12 months. For those with mortgages, this could increase escrow payments by $150-$300 per month, possibly causing financial strain.
Coverage reductions: Average deductibles rose 22% in 2025. Many homeowners are accepting higher deductibles, lower coverage limits, and more exclusions to manage premium costs. But this can leave them significantly underinsured without realizing it until they file a claim.
Property value impacts: Research shows homes in the top 25% most exposed to hurricanes and wildfires have seen values reduced by roughly $20,500 since 2018. In the top 10% most exposed, the reduction averages $43,900.
Practical strategies for homeowners:
- Shop annually—carriers change pricing regularly, and switching can save 20-30%.
- Bundle home and auto insurance for a possible 5-25% discount.
- Increase deductibles strategically to lower premiums, if applicable.
- Invest in home hardening (impact-resistant roofing, fire-resistant landscaping) for premium discounts.
- Maintain continuous coverage to protect insurability.
- Document your property thoroughly for claim processing.
How This Affects Home Buyers
For home buyers across the United States, rising insurance costs can change the affordability math in significant ways.
Insurance now represents roughly 9% of the typical monthly mortgage payment. In high-risk states like Florida or California, it can account for 15-20% of monthly payments.
Critical advice: Get actual insurance quotes for specific property addresses before making offers, not afterward. Many buyers learn too late that insurance costs far more than expected.
Questions to ask the seller before buying a home:
- What is the current annual insurance premium?
- Which company provides coverage?
- Has the property been difficult to insure or had non-renewals?
- Is the property in a high-risk zone?
- What is the claims history?
While these questions might have seemed “pushy” a few years ago, the current insurance crisis has made them as common as asking about the age of the roof or the HVAC system.
In some cases, a buyer who doesn’t ask these questions could risk losing their financing at the last minute, because the bank won’t approve a loan if the insurance premium is unaffordable.
What Experts Predict for the Next 5 Years
Most analysts expect homeowners premiums to rise by around 5% to 8% annually through 2030, assuming no mega-catastrophes. These projections also suggest that premium increases will continue to outpace overall inflation and wage growth.
Related: the future of home insurance in the U.S.
Geography matters a lot as well:
- Coastal hurricane zones face continued pressure despite Florida’s successful reforms.
- Western wildfire zones could see ongoing premium increases and coverage challenges.
- Midwest and Plains states might see higher costs due to increasing severe storm frequency.
- Areas previously considered low-risk in the past are now being repriced as extreme weather spreads.
The long view: Some high-risk areas may reach a point where insurance becomes prohibitively expensive, potentially driving economic retreat from disaster-prone zones. Evidence suggests this is already happening in limited coastal and extreme wildfire areas.
Policy Responses and What’s Being Done
Florida’s model: Aggressive litigation reform and regulatory changes have stabilized the market. Citizens Insurance is even requesting a 2.6% rate decrease for 2026—a stunning reversal.
California’s evolution: After years of restrictive regulation, California is allowing insurers to use catastrophe models and better price for risk, hoping to bring carriers back at realistic prices.
Federal proposals: Various federal programs have been proposed for catastrophe insurance, risk mitigation incentives, and assistance for state insurance programs. But political obstacles remain.
Industry innovation: New approaches include parametric insurance (fixed payouts when specific conditions occur), catastrophe bonds (transferring risk to investors), and resilience programs helping homeowners harden properties.
The Path Forward
The home insurance crisis in America represents a fundamental repricing of risk driven by climate change, construction cost inflation, and decades of inadequate premium levels.
And unfortunately, there is no quick fix to the problem.
For current homeowners: insurance costs will likely continue rising for the foreseeable future. The key is to shop regularly, invest in risk mitigation, and factor rising costs into long-term financial planning.
For prospective buyers: insurance costs should be treated as a key factor in home affordability, equal to mortgage rates and home prices. Buyers can obtain actual quotes before making offers so they can budget realistically.
The insurance crisis has made clear what climate scientists have been saying for years: the costs of climate change are real, immediate, and growing. For homeowners and buyers, those costs now appear in monthly insurance bills rather than abstract future projections.
Disclaimer: This article is for general informational purposes only and reflects broad trends in the U.S. homeowners insurance market. Insurance costs, availability, and coverage vary widely by location, insurer, property, and individual circumstances and may change over time. Nothing in this article constitutes financial, legal, or insurance advice. Readers should consult qualified professionals before making insurance or financial decisions.