A construction worker works on a new home being built in Alhambra, California, March 19, 2026.
Frederic J. Brown | Afp | Getty Images
The cost of home insurance has risen sharply in the U.S. – and policyholders are taking note.
About 71% of homeowners said the cost of their home insurance has increased in recent years, and 42% said costs have increased “a lot,” according to a new survey from Pew Research Center. The nonpartisan research group surveyed 3,524 U.S. adults, including 1,236 homeowners, March 16-22.
The data supports this perception.
Insurance premiums rose an average of $648, or 24%, to $3,303 per year between 2021 and 2024, according to a report released last year by the Consumer Federation of America, a consumer advocacy group.
Average premiums per policy rose 8.7% faster than the rate of inflation from 2018 to 2022, the U.S. Treasury Department said in a report released last year that the agency called the most comprehensive analysis of the home insurance market to date.
Consumers generally purchase home insurance as financial protection against unexpected physical damage to their home. Mortgage lenders often require potential home buyers to take out such insurance to secure a loan.
Insurance experts point to a number of factors that are contributing to the increase in premiums.
To name a few: General inflationary pressures in the U.S. economy have increased the cost of rebuilding homes. Climate change is increasing the frequency and severity of storms and wildfires, which in turn increases costs for insurers, who then pay out more money on insurance claims. Reinsurance rates – the rates for the insurance that insurers take out as financial protection – have also increased.
Now people are choosing to venture into riskier areas, and insurers are increasingly using technologies that influence how they predict and assess risk, experts say.
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For many households, interest rates rise much faster than for others.
According to the Consumer Federation of America report, consumers in a third of ZIP codes across the country saw their premiums increase by more than 30% from 2021 to 2024, with the largest increases in Utah at 59%, Illinois at 50%, Arizona at 48% and Pennsylvania at 44%.
Regardless of where they live, however, most homeowners are at risk: During 2021 to 2024, premiums rose in 95% of U.S. ZIP codes, the group found.
“It’s definitely a pervasive problem,” said Amy Bach, co-founder and executive director of United Policyholders, a consumer advocacy group for policyholders. “At this point, interest rates have risen so much that it just feels unfair.”
Effects of rising premiums
The impact of rapidly rising homeowners’ insurance premiums is impacting consumers, the U.S. economy and the financial system as a whole, according to insurance experts.
On the one hand, according to the Treasury Department report, a home is the largest financial asset for many Americans. The cost and availability of homeowners insurance affects both housing costs and home values, it said.
“Insurance helps make home ownership possible and preserves hard-earned home equity when hazards arise,” wrote Steve Koller, a postdoctoral fellow in climate and housing at Harvard University’s Joint Center for Housing Studies, in a 2024 blog post.
While higher-income households can likely afford to absorb premium increases or fortify their homes against natural disasters, others are more likely to be underinsured — limiting “the viability of homeownership as a route to upward economic mobility” for lower earners and disadvantaged groups, Manann Donoghoe, a fellow at the Brookings Institution think tank, wrote in April.
In addition, there could be “significant consequences” for local governments that rely on property values for tax revenue, as well as for real estate lenders and investors in mortgage securities that rely on insurance for loss protection, the Treasury report said.
Why home insurance costs have risen
According to insurance experts, here’s a breakdown of some of the top reasons home insurance costs have increased.
1. Inflation
A construction worker at a housing development in Alexandria, Virginia, April 8, 2026.
Matt McClain | Bloomberg | Getty Images
Experts say inflation has increased the cost of repairing and rebuilding homes, thereby increasing the amount of money insurers pay out when policyholders make a claim.
“If these costs increase, [insurers] “We won’t eat it,” Bach said. “They will pass it on to consumers.”
For example, replacement costs for property and casualty damage increased by an average of 45% between 2020 and 2023, according to the Treasury Department report. Homeowners insurance is a form of property and casualty insurance, just like renters insurance and automobile insurance.
Labor costs also rose. For example, according to the Treasury report, the cost of employing labor to build single-family homes increased by 37% between 2018 and 2022 and by 45% between 2014 and 2023.
The Covid-19 pandemic contributed to these inflationary pressures by disrupting supply chains, experts said.
“Covid is kind of a hidden driver for a lot of this,” Bach said.
2. Climate change
A car damaged by flooding in the Elmsford area of Westchester, New York, July 15, 2025.
Eduardo Munoz | Reuters
In the United States, the number and intensity of severe weather events such as wildfires, hurricanes, droughts and floods have increased.
The dynamic increases the likelihood that policyholders will have to file insurance claims and the likelihood that those claims will be for higher amounts, experts say.
Peter Kochenburger, an insurance expert and visiting professor of law at Southern University Law Center, said climate change is the “main reason” for the increase in insurance premiums.
“The frequency and severity of storms is increasing — and that means your rain rates are going up, not likely down,” Kochenburger said.
A firefighter rolls up a hose for moving to another location and helps fight the fire at the Max Road Miramar in Pembroke Pines, Florida, May 11, 2026.
Joe Raedle | Getty Images
According to the Treasury Department, the number of weather and climate disasters that caused more than $1 billion in damages increased more than fivefold from 2018 to 2022 compared to the 1980s, adjusted for inflation. The agency cited data from the National Oceanic and Atmospheric Administration and the Federal Emergency Management Agency.
In addition, the average number of major disaster reports per year due to climate-related events has almost doubled compared to the 50-year average between 1960 and 2010, it said.
According to the Treasury report, consumers living in the 20% of ZIP codes with the highest expected annual housing losses from climate-related hazards paid 82% higher premiums from 2018 to 2022 than those in the 20% of ZIP codes with the lowest climate risk.
“Louisiana, Florida and other places are just very at risk,” Kochenburger said. “[But costs] are increasing everywhere.
3. Government regulation
Some reasons why rates are rising so sharply — even outside the areas where the epicenter of major disasters typically are — may not be immediately obvious.
Experts point to government regulation as one factor.
Insurance premiums are subject to “extensive regulation” at the state level, according to a 2025 paper written by researchers at Arizona State University, Columbia Business School and Harvard Business School.
Regulators generally seek to strike a balance between affordability, insurance availability and insurers’ financial solvency, they said.
However, there are “strong price differences” between states that could cause “distortions” in the home insurance market, they wrote.
For example, the researchers found that homeowners’ insurance premiums in less regulated states increase due to insurance losses in highly regulated states. However, the opposite is not the case. In other words, households in less regulated states “bear some of the risks of households in highly regulated states,” they wrote.
Insurers typically submit requests for premium increases to state insurance agencies every year, and approval of these rates is the responsibility of the regulator.
“In some states they are just beginning to be approved,” said Bach of United Policyholders. “The problem [is]: We don’t really know what insurers really need.”
4. Moving to riskier areas
A construction worker in a condominium community in Miami, Florida, February 10, 2025.
Joe Raedle | Getty Images
According to the Treasury, research suggests that a rise in insurance claims in recent years is partly due to more people building new homes in areas at higher climate risk.
Between 2018 and 2022, almost a million new apartments were built in the areas with the highest risk, it said.
Additionally, increased demand for housing in such areas tends to increase property values, leading to higher potential losses for homeowners if climate disasters occur, it said.
5. Reinsurance
Insurers often purchase reinsurance as a financial hedge against large losses they may incur in settling consumers’ insurance claims.
“In recent years, the reinsurance market has been a tough market as reinsurers tightened their terms and conditions, increased rates and required ceding insurers to retain more risk,” the Treasury Department report said.
6. Insurance technology
Insurers also adopted different risk assessment methods, which together led to higher premiums, Bach said.
For example, insurers have moved from traditional underwriting based on historical data to models that are more predictive, which represents a “big shift,” Bach said.
“That means pricing reflects what insurance experts and advisors expect will happen in the future, rather than what actually happened,” she said.
Insurers have also used drone surveillance and data mining to identify homeowners with older homes or homes that may have outdated plumbing and plumbing systems, for example, Bach said.
Homeowners with a poor “risk score” may see fewer insurers competing for their business and could receive higher premiums as a result, she said.
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