U.S. Homeowners Insurance Costs Rise Amid Coverage and Affordability Challenges

The U.S. homeowners insurance market continues to face significant affordability and coverage challenges. From 2024 to mid-2025, the average premium for new home insurance policies increased by 9.3%, reaching $1,966, continuing a multi-year trend of rising costs despite a slowdown from prior steep increases. Since 2022, premiums have surged by 45%, while dwellings (Coverage A) coverage has only grown by less than 12%, leading homeowners to pay more for comparatively less protection.

This upward pricing pressure is contributing to an affordability crisis, placing homeownership out of reach for some and complicating mortgage affordability in many regions. In certain areas, insurance and tax payments now exceed half of monthly mortgage payments. Insurers have heightened financial responsibility for homeowners through increased deductibles, now nearly 25% higher year-over-year, including separate deductibles for wind and hail damage.

Climate volatility plays a major role in premium increases, with an expansion of severe weather risks from traditionally coastal to interior regions, such as the Midwest and Southeast. Convective storms, including hail and tornadoes, have driven double-digit premium hikes in several states like Colorado, Mississippi, and Texas, accounting for a significant share of global insured losses.

Federal tariffs on construction materials such as copper, steel, and aluminum are also contributing to rising replacement costs and insurance premiums. The insurance market's strain has created challenges in the mortgage sector, with nearly two-thirds of lenders reporting frequent insurance-related issues that delay or derail home loan closings.

Despite these challenges, market data signals some easing. The property and casualty (P&C) insurance market’s improved profitability since 2024 has led to relaxed underwriting restrictions. This has increased coverage availability, with quotes per person rising 69% between March 2024 and July 2025. Additionally, the Excess & Surplus (E&S) market is expanding in catastrophe-prone states like California, Florida, and Texas, filling gaps left by traditional carriers transitioning out of high-risk areas. E&S policies now comprise 17% of policies in these states, up from less than 2% two years ago.