New York Homeowners Face Rising Insurance Premiums Amid Multifaceted Cost Pressures
New York is experiencing rising homeowners insurance premiums that are creating financial challenges for homeowners, renters, and landlords, despite the state not being the most expensive nationally.
Recent legislative hearings highlighted multiple factors driving these increases, including inflationary pressures on materials and labor, more frequent weather-related claims influenced by climate change, legal system inefficiencies, and insurance fraud. According to Insurify data, New York's average annual home insurance premium was $2,732 at the end of 2024, ranking it mid-range nationally, with premiums expected to rise about 5% by the end of 2025. Yet, the increases—exceeding $1,000 on average since 2020—have outpaced national trends, with nearly half a million state homeowners uninsured.
Industry testimony pointed to New York City's uniquely high residential construction and litigation costs, which exacerbate premium hikes. Litigation accounts for significant expenses due to high per capita legal cases and the cost-effectiveness of settling marginal claims rather than defending them, fueling a cyclical increase in costs. Climate-related insured losses account for nearly a third of global natural-catastrophe expenses in the last decade, pushing insurers to raise rates or reduce coverage in high-risk zones.
The hearing also discussed regulatory and market solutions. Stakeholders urged lawmakers to improve insurer transparency on rate setting and underwriting practices, enhance accountability for unfair practices, and promote property-specific risk assessments. Emphasis was placed on proactive risk mitigation, including strengthening resilience to weather disasters and innovating in risk management approaches. Some testimony recommended mandatory insurer subrogation claims against fossil fuel companies and divestment from fossil fuel investments.
Consumer advocates proposed a Homeowners Insurance Bill of Rights to address coverage clarity, underwriting criteria based on property risk instead of financial factors like credit, incentivization for resilience upgrades, and swift, disaster-responsive claim payments. This bill has garnered significant public support, demonstrated by over 43,000 petition signatures.
State legislators are evaluating these proposals ahead of the upcoming legislative session, with intentions to empower regulators to curb unfair insurer practices. These developments underscore the complex interplay between inflation, climate risk, legal costs, and regulatory frameworks shaping homeowners insurance affordability in New York.