The Soaring Cost of Homeowners Insurance Just Broke Another Record

The cost of homeowners insurance is continuing its meteoric rise, according to a new report from financial data firm Intercontinental Exchange (ICE).

Annual home insurance premiums rose by a record $276 to $2,290 in 2024, a 14% increase from the previous year. ICE’s March report, released Monday, shows that home insurance costs have skyrocketed 61% since 2019.

While costs are up across the board, certain areas of the country are getting clobbered by the price hikes.

For instance, the Seattle, Salt Lake City and Los Angeles areas each saw insurance prices jump more than 20% last year. And in several Southern cities — Miami, New Orleans, Dallas and Tampa — annual premiums have risen above $3,500.

Why are home insurance prices so high?

Home insurance premiums have ballooned, especially lately, due to a mixture of more frequent natural disasters and increased material costs to repair damaged homes.

Just in the past several months, Florida and California have been devastated by hurricanes and wildfires, respectively, resulting in record-setting damages.

Last year, Hurricanes Milton and Helene in Florida are estimated to have left a $115 billion wake of destruction across the Sunshine State. Earlier this year, the wildfires around Los Angeles caused at least $50 billion in damages.

All the lumber and labor required to make repairs after such disasters are typically paid out by home insurance companies. And they have gotten much pricier, too. Since the start of the pandemic, construction materials have spiked in price by about 40%, far outpacing overall inflation.

Costly and catastrophic storms and wildfires then have rippling effects on home insurance prices across the nation. That’s because insurers often hike their prices in one place to recoup the costs of another in a practice known as “cross-subsidizing.”

How homeowners are coping with increased costs

ICE’s March report found two especially common ways homeowners are trying to escape expensive home insurance rates.

“We’re seeing increases in both the share of borrowers switching policies and borrowers taking on higher deductibles as a way to combat rising premiums,” Andy Walden, head of housing market research at ICE, said in a statement.

A record share of homeowners (11.4%) switched policies last year, according to ICE, up from 9.4% in 2023. In a typical year, Walden said, less than 8% switch.

Another risky method some homeowners are increasingly trying is to skip homeowners insurance altogether. About 6 million homeowners aren’t insured, according to the nonprofit Consumer Federation of America (CFA). In many cases, these are low-income homeowners who may have no choice.

“Many consumers are struggling to afford rising premiums and must go without homeowners insurance,” Sharon Cornelissen, director of housing at the CFA, said in a statement. “That puts them at risk of losing everything.”

Other far-less-risky strategies homeowners can take to lower insurance prices include making certain home upgrades to defend against natural disasters, bundling home and auto insurance policies, and fine-tuning coverage to the cost of rebuilding the home from the ground up (and not based on the home’s entire market value).

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