US Home Insurance Rates Near Crisis Levels, Experts Say

The homeowners insurance affordability index is estimated to reach a record high of 2.4 percent in 2024, according to a recent report.

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Following the Los Angeles wildfires, the North Carolina floods, and the Midwestern tornadoes, new data from the Federal Reserve and the Census Bureau indicate that a growing number of Americans lack homeowners insurance or struggle to afford it.

These reports correspond with a private-sector survey that highlights how homeowners insurance is becoming more expensive and harder to obtain for millions of Americans, as the costs associated with natural disasters, fraud-related expenses, and other ongoing factors pose increasing challenges for both insurers and their customers.

“This steady upward trajectory signals ongoing challenges in the insurance market,” said Dale Porfilio, president of the Insurance Research Council (IRC), a nonprofit research trade organization supported by leading property and casualty insurance companies and associations.

“From natural disasters and legal system abuse to escalating repair costs and fraud, the pressures on insurance costs are significant, and they are driving premiums higher for consumers,” Porfilio told The Epoch Times.

On June 10, the IRC released its annual report, highlighting findings that the average cost of claims per insured home in the United States has risen faster than inflation over the past two decades, driven by natural disasters, rising home repair costs, supply-chain disruptions, and population shifts into high-risk areas.

Using 2022 values for average homeowners insurance expenditures and median household income from Census Bureau data, the IRC estimates that the average U.S. household spent 2.09 percent of its income on homeowners insurance, up from 1.19 percent in 2021 and comparable with the peak set in 2014.

Based on industry projections for average homeowners insurance expenditures in 2023 and 2024, the affordability index is estimated to reach a high of 2.4 percent in 2024—the highest level on record.

“This indicates both the rate and coverage increases necessary to offset all loss pressures. This steady rise significantly outpaces general inflation, signaling deeper issues in insurance markets,” the report states.

The report also highlights significant geographic disparities. In 2022, Utah, Oregon, and Alaska ranked as the most affordable states for home insurance, while Louisiana, Florida, Mississippi, Oklahoma, and Arkansas were the least affordable. Florida, despite remaining the second least affordable, experienced a slight improvement from 2021.

Porfilio noted that legislative reforms enacted in the Sunshine State in 2022 and 2023 have resulted in a decrease in property claim lawsuits and an increase in private insurer participation, although these changes are not yet fully reflected in the data.

The Internal Revenue Service’s concerns dovetail with similar findings from the Federal Reserve’s 88-page report released on May 25, which examines the financial lives of U.S. adults and their families. The report draws on the central bank’s annual Survey of Household Economics and Decision-Making conducted in October 2024, indicating that Americans’ financial well-being remained similar to that of the previous two years but fell below the peak reached in 2021, when the housing market grew by a record $6.9 trillion.

Highlighting the declining health of the nation’s housing market in 2024, the report notes that 7 percent of all U.S. homeowners went without homeowners insurance, up from 4 percent in 2023. Similar to the IRC report, the share of homeowners lacking insurance varies widely by geography, ranging from 2 percent in New England to 13 percent in the West-South Central division.

In addition, homeowners living in rural areas and low- to moderate-income census tracts were less likely to have homeowners insurance, according to the report.

Meanwhile, new data from the Census Bureau’s American Community Survey, also released on June 10, show that more than 5.3 million households paid more than $4,000 for their property insurance in 2023. In the report, the Department of Commerce’s census data-collection agency gathers information on property insurance costs from all homeowners, regardless of whether their homes have a mortgage, and includes these costs as part of their monthly housing expenses.

At least one state in each of the nation’s four census regions (the Northeast, South, Midwest, and West) made the list of the most expensive in which to insure a mortgaged home. Among the 10 states with the highest annual insurance costs for mortgaged homes in 2023, five are in the South (Florida, Louisiana, Oklahoma, Texas, and Mississippi); three are in the Midwest (Nebraska, Kansas, and Minnesota); and one each in the West (Colorado) and Northeast (Rhode Island).

While it is not usually the most considerable household expense, homeowners insurance can represent a significant portion of homeowners’ costs, according to the report. Most homeowners maintain some form of property insurance on their homes, which their mortgage lender often requires.

Both Porfilio and California insurance executive Robert Feldman believe that the nation is facing a mounting crisis that could stall a housing market recovery even if the Federal Reserve decides to lower interest rates this summer or later this year.

Feldman, co-founder and CEO of WOWS Insurance Services, told The Epoch Times that he has spent the past 25 years observing insurance rates rise in California, and the situation has worsened further because of the recent wildfires in the state.

He advised that all prospective homebuyers consider mortgage payments, property taxes, and homeowners insurance when purchasing a new home. Insurance and real estate professionals must also educate consumers more effectively about the importance of insurance costs in the home-buying process and their impact on affordability, the Los Angeles County insurance broker said.

Feldman warned that, with an increasing number of volatile weather events occurring throughout the United States, alongside interest rates more than doubling and insurance premiums rising simultaneously, homeowners of all income levels are caught in a crisis that will persist until action is taken.

“Right now, you have a lot of people in the United States who couldn’t afford their own homes,” said Feldman, whose specialty is providing insurance in fire zones and other hard-to-place areas.

“If you have an insurance policy that was $2,000, that’s now $4,000, and went from $200 to $400 a month; you have to make that $200 a month up somewhere. So, if you say this issue is becoming a crisis, my argument is we are already there,” he said.

The California insurance expert noted that he currently travels throughout the state to educate real estate professionals, consumers, and insurance carriers about how to insure homes that struggle to obtain coverage because of rising costs.