Homeowners insurance premiums soar 70%, reshaping U.S. housing decisions

The cost of protecting a single-family home in the United States has climbed to a record average of $2,370 per year, according to new figures from ICE Mortgage Technology. The data show a 70 percent jump in premiums over the past 5½ years, outpacing gains in mortgage rates, property taxes, and home prices.

Rising premiums enter buyer negotiations

Higher insurance bills are altering conversations between buyers, sellers, and lenders across the country. A recent Realtor.com survey of recent and prospective buyers found that 75 percent fear they may be unable to afford homeowners insurance in the future, while nearly 90 percent expect prices to keep climbing. Industry professionals report that insurance costs—once a secondary consideration—now figure prominently in purchase negotiations, especially in states frequently hit by natural disasters.

John Powell, owner of an insurance agency in Plano, Texas, described the situation as “sticker shock” for many clients. His observation is in line with national trends: premiums rose 4.9 percent during the first half of the year and 11.3 percent compared with the same period 12 months earlier.

Regional disparities intensify

Premium growth is most pronounced in areas prone to hurricanes, wildfires, and floods. Homeowners in Miami now pay an average of $502 per month, up from $306 at the end of 2019, making the city the most expensive market for property coverage. New Orleans follows at $472 per month. California cities are also experiencing sharp increases as new state regulations take effect in the aftermath of major wildfires.

Rising repair costs add further pressure. Higher prices for building materials and labor mean insurers spend more on claims, which ultimately translates into higher premiums for policyholders. The Insurance Information Institute notes that climate-related disasters in 2023 alone generated tens of billions of dollars in insured losses, a trend accelerating the withdrawal of some carriers from high-risk zones.

Climate risk and carrier exits

Climate change is intensifying the frequency and severity of hurricanes, hailstorms, and wildfires, forcing insurers to reassess risk models. In states such as Florida, Texas, and California, several large carriers have reduced coverage or exited the market altogether after consecutive years of heavy losses. Homeowners left with fewer options often turn to state-backed insurers of last resort, which can carry higher premiums and limited coverage.

Data from the National Association of Insurance Commissioners confirm that loss ratios in disaster-prone areas remain above national averages, underscoring the financial strain on insurers and the ongoing upward pressure on consumer rates.

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Hidden costs add to affordability challenges

Insurance joins property taxes, maintenance, and homeowners-association dues as one of the so-called hidden costs of ownership. For buyers already contending with elevated mortgage rates and near-record home prices, escalating premiums can tip affordability calculations. Some prospective buyers are revising budgets or targeting regions with lower perceived climate risk to manage long-term costs.

Industry analysts do not expect immediate relief. Unless the pace of severe weather events slows or insurers identify new strategies to spread risk, premiums are likely to remain on an upward trajectory, making insurance a decisive factor in future housing transactions.

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Crédito da imagem: ICE Mortgage Technology