The Insurance Squeeze: Why Premiums Are Skyrocketing
Premiums for property insurance have become a major strain for homeowners across the country, hitting nearly everyone, not just those in disaster-prone areas.
The numbers are clear: between 2018 and 2024, the national average home insurance premium nearly doubled, rising from $1,089 to $1,761. This sharp increase, confirmed by recent research, means that insurance now takes up a much larger share of the typical homeowner’s budget than it did just a few years ago.
What’s driving this surge? The answer lies in the rising number and cost of disaster-related claims. Major insurers are facing more payouts due to hurricanes, wildfires, floods, and other extreme events. In response, they’re either pulling out of high-risk states or hiking premiums to cover their growing liabilities. Homeowners in these areas often have little choice but to accept higher costs or scramble to find new coverage, sometimes from smaller, more expensive providers.
Florida offers a clear example of how severe this crisis has become. In Miami, the annual home insurance premium for a median-priced home now exceeds $11,000. And California is facing similar pullouts and rate hikes, with insurers leaving entire regions after repeated wildfire losses. This isn’t just a coastal issue. Even in states like Texas, where hailstorms and floods have become more frequent, homeowners are seeing steady rate increases. The pattern has spread nationwide, making high insurance costs a reality for many, regardless of their location.
These rising premiums don’t just affect homeowners. Landlords facing higher insurance bills often pass those costs on to renters through increased rents. In multi-family properties, insurance is one of several operating costs that get bundled into what tenants pay each month. As insurance claims and payouts climb, so does the pressure on everyone in the housing market.
For homeowners, especially those on fixed or modest incomes, the unpredictability of insurance costs is a growing concern. Unlike a mortgage payment, which can be fixed for decades, insurance premiums are subject to annual increases. Some families find themselves paying far more for insurance than they ever expected. When an insurer leaves the market, the scramble for replacement coverage can be both stressful and expensive.
The reality is that insurance, once a relatively minor line item in the budget, is now a significant factor in home affordability. With premiums and property taxes both on the rise, homeowners are finding it harder to keep their monthly costs predictable.
For those who have built up equity in their homes, that financial cushion is becoming more critical than ever. It helps absorb the blows from rising expenses and provides options if budgets get tight.
With insurance and taxes climbing, this makes a homeowner’s equity cushion even more critical.
