Across the country, homeowners are facing a sharp rise in home insurance premiums, adding new financial stress at a time when the housing market is already under pressure. According to Zillow, insurance rates for homes have jumped by 38 percent since 2019, nearly doubling the 22 percent growth in median homeowner income during the same period. This increase is not just a slight bump; it is a significant shift that could have long-lasting impacts on homeowners and the housing market overall.
Zillow explained, “In the largest metro areas, insurance costs range from $1,200 to $4,000 annually for the typical homeowner and comprise about 2 percent of household income. The typical annual insurance premium has increased by $500 since 2019.”
Regional Differences and Climate Risks
These rising insurance costs are not uniform across the country. In Boston, premiums have only gone up by 14 percent since 2019, which means an extra $267 a year for homeowners. But in places like Miami, premiums have soared by 57 percent, adding nearly $1,500 each year to housing costs. Zillow noted that Miami saw the highest growth in premiums, followed by Sacramento, Jacksonville, and Richmond. These areas all face extreme weather risks, including wind damage and wildfires.
The Treasury Department’s Federal Insurance Office confirmed in a January report that homeowners in areas with “substantial weather events” are paying more for insurance. Between 2018 and 2022, households in the top 20 percent of ZIP codes facing the greatest weather-related risks paid an average premium of $2,321. This was 82 percent higher than premiums in the safest areas. These rising costs are linked to climate change and the increasing frequency of extreme weather events.
The Broader Impact on the Housing Market
Rising insurance costs have become a major part of the housing crisis. Sharon Cornelissen, director of housing at the Consumer Federation of America, said in an April statement that these rising costs are “deepening the housing crisis from Salt Lake City to New Orleans and beyond—and homeowners across the country are feeling the strain.” She called for urgent action, saying, “If we want to protect affordable homeownership, federal and state policymakers need to take action to address the rising costs and reduce risk for individuals and communities.”
The pressure from insurance premiums adds to the many challenges in today’s housing market. A recent LendingTree report found that 11.3 million American homes are now uninsured, about one in seven properties across the nation. Rob Bhatt, a home insurance expert at LendingTree, explained, “We were very surprised by those numbers. That’s a lot of people without insurance and much higher than we expected.” He added, “For some, it’s become a choice between keeping the lights on and feeding the family or paying the insurance bill. That’s a tough decision.”
Sharp Increases in Certain States
Some states have been hit even harder than others. A report by the Consumer Federation of America shows that homeowners insurance rates rose by 24 percent nationwide between 2021 and 2024, reaching an average of $3,303 per year. In Utah, premiums skyrocketed by 59 percent over just four years, driven by more homes being built in wildfire-prone areas and insurance markets catching up to real costs. Illinois, Arizona, Pennsylvania, and Nebraska also saw major jumps.
Meanwhile, Florida remains one of the most expensive states for homeowners insurance. In Florida, a homeowner with fair credit and $350,000 in dwelling coverage can expect to pay $9,462 a year in 2024. That is up nearly 30 percent from 2021, when premiums averaged $7,344. Douglas Heller, the Consumer Federation of America’s director of insurance, warned, “The insurance commissioners and lawmakers we depend upon to ensure that this critical coverage is available and affordable have not done enough. Americans are stuck buying insurance from companies that our public officials seem afraid of.”
What’s Behind the Rising Costs?
Several key factors are causing these jumps in premiums:
- Climate Change: Wildfires, flooding, hurricanes, and other disasters are causing more damage, leading to higher insurance payouts.
- Inflation: The cost of labor, building materials, and repairs has risen, making insurance more expensive.
- Reinsurance Costs: Insurance companies themselves buy insurance for large disasters. These costs have grown and are now being passed on to homeowners.
- Regulatory Challenges: In many states, insurance companies have been allowed to raise rates more easily, which has added to the burden on homeowners.
These challenges are combining to make homeownership more expensive in ways that many did not expect when buying their homes.
How Homeowners Are Trying to Cope
With premiums rising quickly, some homeowners are looking for ways to reduce costs. Strategies include bundling home and auto insurance for a discount, raising deductibles, and shopping around for better deals. However, experts warn that cutting too much coverage can be dangerous. The Insurance Information Institute says that increasing your deductible from $500 to $1,000 could save up to 25 percent on your premiums, but it is important to have enough emergency savings to cover any damage.
Credit history can also play a role in setting premiums, so improving credit scores can help lower rates. It is also wise to review your personal property coverage and make sure you’re not paying for coverage you no longer need.
Broader Market Challenges
Rising insurance premiums are just one of many issues facing the housing market. Home sales have slowed to their lowest levels since 2009, with the average 30-year mortgage rate at 6.8 percent or higher. Even as home sales have dropped, prices remain high, which has kept many potential buyers on the sidelines. In some areas, like California, more homes are on the market, giving buyers more negotiating power. However, as prices stay high and insurance costs climb, many people still find it hard to buy a home.
Some experts are warning that this could lead to a longer-term slowdown in the housing market. Others believe that the current market could offer good opportunities for those who are financially ready, especially as more homes become available and sellers offer price reductions or other incentives.
The Future of Homeownership
The surge in home insurance premiums has become yet another obstacle for many people trying to own a home. As one homeowner said, “It’s like every piece of the puzzle is getting more expensive, and the whole picture is starting to feel impossible.” While there are steps that can help manage these costs, the rising premiums are a sign that the challenges of homeownership today go far beyond just the mortgage payment.
With policymakers and insurance regulators under growing pressure to find solutions, the coming months could be a turning point. For now, homeowners and buyers alike are forced to navigate a market where everything—insurance, taxes, mortgage rates—seems to be climbing higher.
