Insurance costs continue rising as 71% of US homeowners report price increases

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• 🔥 Quick Facts
• A Decade of Rising Costs Reshapes Homeownership Economics
• Climate Catastrophes and Construction Costs Drive Industry-Wide Losses
• Premium Growth Patterns and Geographic Disparities
• Why Homeowners Cite Insurance Company Profits and Rebuilding Costs
• Market Dynamics: Insurer Exits and Price Signals
• Will the 2026 Insurance Affordability Crisis Reshape Housing Markets?
  • Sources

71% of U.S. homeowners report that their home insurance costs have increased over the past few years, according to a May 2026 Pew Research Center survey of more than 1,200 homeowners. This widespread affordability crisis reflects a five-year trend of rising premiums driven by climate disasters, elevated construction costs, and labor shortages across the insurance industry.

A Decade of Rising Costs Reshapes Homeownership Economics

Homeowners insurance premiums have climbed 74% since 2016 while home prices rose 40% after inflation adjustment, according to Harvard University research. This disparity signals a fundamental shift in housing costs. Insurance companies cite three primary factors: mounting claims from weather disasters, reconstruction costs inflated by supply-chain disruptions, and labor scarcity in construction trades. The fifth consecutive year of premium growth in 2026 marks an unprecedented strain on household budgets nationwide.

Regional disparities underscore the severity. Florida residents pay an average of $7,136 annually—the highest in the nation—while Louisiana, Kansas, Oklahoma, and Colorado round out the most expensive states. Conversely, Hawaii, Massachusetts, Maine, and a few other states expect rate decreases of up to 2% by end of 2026, offering limited relief to most Americans.

Climate Catastrophes and Construction Costs Drive Industry-Wide Losses

The insurance industry faces structural headwinds. Weather disasters accounted for 92% of all 2025 losses and 97% of insured losses, per Munich Re‘s global catastrophe analysis. This concentration reflects an acceleration of extreme weather events—from wildfires and hurricanes to hail storms and flooding. When combined with construction material inflation that outpaced general CPI growth from 2019 to 2024, insurers responded by raising premiums across the board.

Rising mortgage rates compound affordability challenges. Higher borrowing costs push some potential homebuyers out of the market entirely, but existing homeowners face a double squeeze: elevated mortgage payments and surging insurance premiums consume a growing portion of household income. The Dallas Federal Reserve documented that construction costs and destructive weather increased more than expected from 2019 to 2024, directly causing insurance company payouts to spike.

Premium Growth Patterns and Geographic Disparities

Industry forecasts project 4% to 8% increases in 2026, depending on regional risk profiles. Insurify data estimates the average premium will rise from $2,948 in 2025 to $3,057 in 2026. However, this aggregate masks extreme variation. In high-risk coastal states, annual increases of 10% to 20% or more remain common. Cotality insurance analysts project approximately 8% growth nationwide, reflecting ongoing cost pressures and elevated risk levels across the sector.

Metric	2025 Baseline	2026 Projection	% Change
National Average Annual Premium	$2,948	$3,057	+4%
Florida Average	TBA	$7,136	Highest in US
Homeowners Reporting Increases (Pew Survey)	TBA	71%	+Majority
Premium Growth Since 2019	TBA	+70%	Five-Year Total
Forecasted 2026 Growth Rate (Industry)	TBA	4-8%	Range

The Dallas Federal Reserve analysis revealed that insurance premiums nationally rose about 70% from 2019 to 2025, far outpacing wage growth or inflation for most households. Regional analysis shows that states with hurricane exposure and wildfire risk zones absorb the largest increases, while some lower-risk regions experience modest relief.

“The United States is now facing a major climate-driven crisis of homeowner’s insurance affordability, availability, and protection.”

— Levy Institute, Policy Analysis Report, April 2026

Why Homeowners Cite Insurance Company Profits and Rebuilding Costs

The Pew Research survey identified the two most commonly cited reasons for increases: insurance companies wanting higher profits and rising costs of repairing and rebuilding. This dual perception reflects actual industry dynamics. Insurers argue that underwriting losses from catastrophic events justify rate hikes. Policyholders counter that corporate earnings growth partially drives premium growth independent of claims costs.

Labor shortages compound reconstruction expenses. Licensed contractors and skilled tradespeople remain in short supply across most markets, pushing hourly rates and project costs upward. When a homeowner files a claim for water damage or structural repairs, estimated repair costs embedded in insurance underwriting models reflect these elevated labor and material expenses. Insurers pass anticipated future losses onto premiums to maintain adequate reserves.

Consumer debt pressures amplify the affordability squeeze. Households already burdened by credit card balances and elevated mortgage payments find little budget flexibility for 10-30% insurance premium jumps year over year. Some homeowners respond by cutting coverage or shopping aggressively for new policies, while others accept higher deductibles or skip optional endorsements.

Market Dynamics: Insurer Exits and Price Signals

Several major insurance carriers have halted new policies or exited high-risk states entirely since 2023, reducing competition and pushing remaining insurers toward steeper rate increases. Florida, California, and Louisiana experienced the most dramatic carrier pullbacks. When fewer insurers compete for customers, pricing power shifts decisively toward remaining providers, and rate increases accelerate beyond what competitive market forces alone would dictate.

State insurance commissioners face competing pressures. Consumer advocates demand rate caps to protect affordability; insurers demand higher premiums to sustain solvency and maintain reserve adequacy. Florida’s insurance market exemplifies this tension, with multiple carriers seeking rate increases of 15-25% annually while the state struggles to balance consumer protection with industry viability. The longer-term risk: if premium growth outpaces affordability, uninsured homeowners increase, reducing financial stability across the housing market.

Will the 2026 Insurance Affordability Crisis Reshape Housing Markets?

The current trajectory raises existential questions. If homeowners insurance costs continue climbing at 4-8% annually while median incomes grow at 2-3%, affordability will deteriorate further. Young first-time buyers already priced out by mortgage rates near 6.5% may find insurance costs the final barrier to ownership. Existing homeowners in high-risk regions might strategic relocate to lower-risk states with cheaper premiums.

Policy responses remain uncertain. Federal and state legislators have proposed solutions ranging from subsidized federal programs for high-risk properties to strengthened reserve requirements that stabilize insurers without passing 100% of costs to consumers. The Treasury Department flagged the crisis as a systemic risk to housing markets and financial stability in January 2025, signaling that federal intervention may accelerate. Yet consensus on solutions remains elusive heading into mid-2026.

Sources

• Pew Research Center – May 2026 survey of 1,236+ homeowners on insurance cost trends
• Harvard Joint Center for Housing Studies (JCHS) – Long-term premium vs. home price analysis
• The Zebra – 2026 State of Insurance home trend report with premium projections
• Dallas Federal Reserve – Analysis of construction costs and insurance rate impacts on Texas homeowners
• Munich Re – Global natural catastrophe loss data for 2025 and disaster frequency
• Insurify – Marketplace analysis and 2026 premium forecasts by state
• Levy Institute – Policy research on climate-driven insurance affordability crisis
• U.S. Department of Treasury – January 2025 report on homeowners insurance as systemic risk