Buying a home is one of the biggest purchases you’ll ever make. And homeowner’s insurance is what protects that investment. Think of it as your safety net. NerdWallet explains it:
- Covers Repairs and Rebuilding Costs: If your home is damaged by fire, storms, or other covered events, it helps pay for repairs or even a full rebuild, if necessary.
- Protects Your Belongings: Coverage can extend to personal items like furniture, electronics, jewelry, and clothing if they’re stolen or damaged.
- Provides Liability Coverage: If someone is injured on your property, your policy may help cover medical bills or legal expenses.
That peace of mind does come with a cost. And lately, those costs have been rising.
Why Home Insurance Premiums Are Going Up
There are a number of factors causing insurance premiums to rise today. In simple terms, here’s what’s driving prices higher according to the Insurance Research Council (IRC).
Severe weather events and natural disasters are happening more often, which leads to more claims. At the same time, homebuilding materials and labor have become more expensive. When insurers need to repair or rebuild homes, those higher costs get passed along.
That combination adds up to higher premiums. You can see how insurance costs have climbed in recent years in the chart below.
The good news is that the annual pace of these increases may be starting to slow, according to ResiClub and Cotality:
- 2023–2024: Insurance costs rose about 14% per year
- 2025: Costs increased roughly 10%
- 2026–2027 (projected): Expected increases of about 8% annually
While costs are still rising, the slower pace is a welcome shift. And there’s another potential silver lining.
Mortgage rates have been easing, which can help offset higher insurance expenses. As Michael Gaines, Senior VP of Capital Markets at Cardinal Financial, explains:
“Rising taxes and insurance do create pressure, but they don’t erase the benefits of a lower rate. A small rate improvement, paired with the right loan program and smart planning, can still make homeownership possible.”
Costs Will Vary Based on Where You Buy
So how much should you budget for homeowner’s insurance? It depends on your home’s price, location, coverage needs, and more. Just like everything else in real estate, costs vary widely by area.
You can get a rough sense of typical premiums by state in the map below.
What Buyers Can Do to Plan Ahead
Your first insurance payment is usually included in your closing costs. After that, it becomes a recurring monthly or annual expense. Knowing premiums are rising helps you plan more accurately and avoid surprises.
If you’re looking for ways to manage costs, Insurify and NerdWallet recommend a few smart strategies:
- Shop Around: Compare quotes from multiple insurance providers.
- Bundle Policies: Combining home and auto insurance can unlock discounts.
- Ask About Discounts: Many buyers miss savings they already qualify for.
- Highlight Upgrades: A new roof or storm-resistant features may reduce premiums.
- Improve Your Credit: Stronger credit often leads to better insurance rates.
Bottom Line
If you’re thinking about buying a home, don’t forget to plan ahead for homeowner’s insurance.
While costs are rising, understanding what to expect—and knowing how to shop smart—can make a meaningful difference in your budget. This is one expense you don’t want to skimp on. It’s your protection for what’s likely your biggest investment.
