Home Insurance Costs Surge, Deepening Housing Affordability Strain

Consumers experienced an increase in their average premiums of 18% in the Northeast, 25% in the Midwest, 27% in the Southeast, and 43% in the West during that seven-year span, even when adjusted for inflation, as stated in the report that detailed data across four regional areas. In 2024, the Southeast recorded the highest average premiums at $1,818 annually, while the Northeast had the lowest at $1,396, according to the NAIC.

Since the start of 2025, premiums have surged an additional 7%, as reported by the Bureau of Labor Statistics’ producer price index. Although this index does not directly indicate consumers’ out-of-pocket expenses, it serves as a useful indicator of premium trends over time, according to the National Association of Realtors.

Climate change, escalating home reconstruction expenses, and various other factors have increased financial risks for insurers, who are, at least in part, transferring this financial burden onto consumers, according to insurance experts. At the same time, this situation is placing additional pressure on homeowners amidst a wider affordability crisis and a U.S. inflation rate that has exceeded policymakers’ target for over five years.

According to the National Association of Realtors (NAR), individuals’ capacity to afford a home is approximately 10% lower than it would be if insurance costs had remained consistent since the late 1990s.

This financial strain disproportionately affects low-income families, who are more inclined to forgo their insurance coverage entirely — thereby jeopardizing their homes, which are often their most significant financial assets, in the event of a disaster, stated Peter Kochenburger, an insurance expert and visiting law professor at Southern University Law Center.

“It’s a big problem,” Kochenburger said.

The NAIC analysis revealed that insurance companies are increasingly discontinuing policies for customers, choosing not to renew them upon expiration. According to Kochenburger, this typically occurs when an insurer assesses that the associated risks surpass their potential for profit. Since 2018, nonrenewal rates per 1,000 active policies have risen nationwide, with increases ranging from 96% in the Southeast to 216% in the West, as reported by NAIC. These nonrenewals are initiated by the insurance providers. As of 2024, there were 103 million homeowners insurance policies active in the United States, according to NAIC.

“The data tells the story of a homeowners insurance market that is overall operationally robust but nonetheless under pressure and exhibiting signs of stress,” the report’s co-authors, Jeffrey Czajkowski and Paula Harms, said.