Most of the Country Experiencing Rising Cost of Homeowners Insurance
Published Date: 04/06/2025
π The Rising Cost of Homeowners Insurance: Why It’s Happening and What You Can Do About It
Across the United States, homeowners are opening renewal letters with a mix of disbelief and frustration. Annual home insurance premiums are climbing at record speed — and for many, the increases are becoming unsustainable.
According to a recent study by the Consumer Federation of America, insurance premiums rose in 95% of all ZIP codes between 2021 and 2024. That translates into an additional $21 billion in premium costs nationwide, with the average homeowner paying about $648 more each year.
In a recent appearance on Insurance Hour, industry expert Karl Susman, founder of Susman Insurance Agency, explained why this is happening, what’s driving costs higher, and what homeowners can do to protect themselves. His insights paint a comprehensive picture of a market in turmoil — and a path toward smarter, more proactive coverage.
π The Nationwide Surge: Not Just a “California Problem”
While headlines often focus on California’s insurance crisis, the numbers show this is a national trend. States like Florida, Louisiana, and Texas have seen the steepest hikes, driven by hurricanes, floods, and other catastrophic weather events. But even areas previously considered “safe” from natural disasters are no longer immune.
“We’re seeing the result of everything from inflation to rising construction costs to natural disasters happening countrywide,” Susman explained. “Insurance companies are buying the stuff that’s now costing everybody more money.”
In essence, insurance is a reflection of the broader economy. When labor, lumber, and materials cost more, rebuilding homes costs more — and insurers must raise premiums to cover those future claims.
πͺοΈ Natural Disasters Are Reshaping Risk Maps
In past decades, insurance pricing models relied on predictable patterns: hurricanes in the Gulf Coast, tornadoes in the Midwest, wildfires in the West. But as the climate crisis accelerates, disasters are becoming more frequent, severe, and widespread.
- Wildfires now threaten suburban communities once considered low risk.
- Flooding is appearing far inland, thanks to heavier rainfall and aging drainage systems.
- Hailstorms and wind events are hitting areas that rarely experienced them before.
Insurers are using increasingly sophisticated catastrophe models to price this new reality — and that’s translating into rate hikes everywhere.
In Florida, for example, average premiums have climbed above $6,000 annually, while in Louisiana, many homeowners are paying over $5,000 per year. Even inland states like Iowa, Ohio, and Kentucky have seen double-digit increases.
π Inflation’s Hidden Impact on Insurance
Home insurance isn’t just about replacing what’s lost — it’s about replacing it at today’s prices.
Over the past three years, the U.S. has experienced the highest inflation rates in four decades. Construction materials like lumber, steel, and concrete rose by as much as 40%, while skilled labor costs spiked due to shortages in the construction trades.
“Remember, insurance companies are buying the stuff that’s now costing everybody more money,” Susman reminded viewers.
If it costs 30% more to rebuild a home than it did two years ago, insurers must either raise premiums or risk insolvency. Even policyholders who haven’t filed a claim are affected, because their potential rebuild costs have increased dramatically.
π‘ What Can Homeowners Do?
Susman offered several practical strategies for homeowners struggling with rising premiums — and emphasized that education and advocacy are key to regaining control.
1. Shop Around
It might sound simple, but it’s more important than ever.
“Always shop around and find out what options are available,” Susman advised. “It might be slim pickings depending on where you are, but it always helps to shop.”
Different insurers evaluate risk differently. One company might flag your ZIP code as high risk, while another might not. Independent agents can access multiple carriers and identify coverage options you may not find on your own.
2. Look for Discounts
Homeowners often miss out on easy savings by not exploring available discounts. Many insurers offer rate reductions for:
- Installing smoke detectors, deadbolt locks, or burglar alarms
- Bundling home and auto policies
- Completing home hardening upgrades, such as fire-resistant roofs or impact-resistant windows
- Staying claim-free for several years
Even a few small discounts can add up to hundreds in annual savings.
3. Harden Your Home
In disaster-prone regions, insurers reward resilience. Measures like clearing defensible space, upgrading to Class A roofing, and installing fire-resistant siding can not only make your home safer — they can also lower your premium.
States like California and Colorado are beginning to require insurers to offer mitigation-based discounts, meaning your investments in safety can pay off twice: first by reducing risk, and second by lowering costs.
4. Review Your Coverage Annually
One of the most common — and costly — mistakes homeowners make is failing to review their policy regularly.
Ensure that your coverage limits reflect current rebuild costs. Many older policies are based on outdated valuations that may leave you underinsured. Work with your agent to adjust your dwelling coverage and personal property limits accordingly.
πΊοΈ Where Are Premiums Still Affordable?
When asked which states still offer affordable homeowners insurance, Susman surprised many by answering:
“Guess where the least expensive state in the country is to live? Hawaii.”
While Hawaii has its share of unique risks (like volcanic activity), it’s largely insulated from the hurricanes, tornadoes, and wildfires plaguing the mainland. Other states with relatively low insurance costs include Oregon, Utah, Idaho, and Wisconsin, where disaster frequency remains lower and rebuilding costs are more stable.
Still, Susman cautioned that “no state is immune to change.” As climate volatility continues, insurers will update their pricing models — meaning affordability today doesn’t guarantee affordability tomorrow.
π£ Advocacy: The Forgotten Tool
Perhaps the most empowering takeaway from Susman’s interview was his call for consumer advocacy.
“As consumers, we really have more power than we think we do,” he said. “Talk to your local legislators. Tell them that you want to have options. You want ways to help.”
Homeowners can and should push for policy reform at the state level. Some ideas under discussion include:
- Tax-exempt home safety savings accounts — allowing homeowners to save for upgrades like generators or fire-resistant roofing.
- State tax deductions for insurance premiums, to offset rising costs.
- Stronger regulatory oversight to ensure fair pricing and prevent insurer withdrawals.
By voicing concerns to local representatives, consumers can influence the balance between insurance company solvency and public affordability.
ποΈ The Bigger Picture: A Market Correction in Motion
The current insurance crisis is, in many ways, a market correction. After years of underpricing risk and absorbing escalating losses, insurers are now recalibrating their models.
That’s why rate hikes aren’t limited to one region or one type of disaster. From wind in the Midwest to hail in Texas and wildfires in California, risk is being repriced in real time.
Unfortunately, this correction coincides with an economic environment that’s already straining household budgets. For many middle-class homeowners, insurance — once a stable, predictable expense — has become a financial stress point.
π§ What’s Next: Toward a More Resilient Insurance Future
Looking ahead, several trends could reshape the industry — potentially stabilizing rates over the next decade:
- Expanded use of catastrophe modeling — to price risk more accurately and avoid blanket rate hikes.
- Public-private partnerships, such as reinsurance programs, to share catastrophic losses between governments and insurers.
- State-level mitigation funding, helping homeowners strengthen properties in exchange for lower premiums.
- Regulatory modernization, balancing consumer protection with insurer flexibility.
Susman believes these steps are crucial:
“We’re going to keep seeing rates go up, but there are smart, targeted ways to slow that trend without crippling the market.”
π¬ The Bottom Line
The sharp rise in homeowners insurance isn’t just about profits — it’s about risk, rebuilding, and reality.
From inflation to climate-driven catastrophes, insurers are responding to unprecedented pressures. While the situation may feel overwhelming, homeowners aren’t powerless. By shopping wisely, hardening homes, and advocating for reform, consumers can regain control over their insurance destiny.
“Insurance is about partnership,” Susman concluded. “The more we work together — consumers, agents, and lawmakers — the stronger and fairer the system becomes.”
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