Like many homeowners, when my husband and I recently opened our home insurance renewal email, our jaws dropped. Our annual home insurance premium in Aurora, Colorado, nearly doubled, from about $5,600 to nearly $10,000. It will also increase our monthly mortgage payments by several hundred dollars.
Confused and shocked, we called our insurance agent for an explanation. The agent told us that claims costs in our area have increased by about 60-80% in recent years, so this was due to rising premiums.
I also noticed a new addition to our policy: Instead of a flat deductible of $1,000 per wind/hail as we had for the last 12 years, we were now on the hook for a deductible of 1% of the total home insurance amount, or almost $8,000. Double strike.
After 12 years of working with our insurer, we decided to shop around and change companies for more affordable rates. We are not alone.
Across the country, higher home insurance rates, driven by higher replacement costs and rising claims amounts, are changing the affordability equation for both potential home buyers and existing homeowners.
Home insurance rates have jumped 40.4% from 2019 to 2024according to LendingTree's “State of Home Insurance: 2025” report. Since 2021, rate growth has accelerated by 5.4%, 11.0% and 11.4% in 2022, 2023 and 2024, respectively. Home insurance rates increased 11.4% in 2024 alone, with the average annual cost in the U.S. being $2,801, according to LendingTree.
For consumers, this means they will have to buy policies regularly and be more careful about where they can afford to live.
For mortgage lenders, this changes the way they approach budget discussions with borrowers as insurance costs increasingly strain homebuyers' budgets.
Josh Lewis, a certified mortgage consultant with BuyWise Mortgage in Huntington Beach, Calif., said that for most of his 30 years in the lending business, home insurance was an afterthought—something borrowers bought at the last minute.
But now the situation has changed dramatically, especially for buyers with tight debt-to-income ratios. If your home insurance premium is too high, it could prevent someone from qualifying for a mortgage if their DTI exceeds the loan program's rules, Lewis explained.
Where home insurance rates have jumped the most
Montana and Nebraska saw the biggest jumps in home insurance rates in 2024, both at 22.1%, according to LendingTree's analysis. Minnesota and Washington are close behind at 19.5%; no state saw a decline in these premiums.
Chuck Nice, a professor of risk management and insurance at Florida State University, noted that rates rose significantly in Florida from 2022 to 2024, but they have since stabilized. Meanwhile, he said, Nebraska recently became one of the states with the highest premiums for severe convective storms, tornadoes and hail.
Wind and hail damage actually caused the damage. majority (42.5%) of all homeowners insurance losses according to ISO, in 2023 associated with property damage.
“You will continue to see rates rise in some parts of the country,” Nice said, adding that wildfire-prone areas such as California and Colorado also saw premiums jump significantly after catastrophic losses.
The January 2025 Palisades and Eaton fires, which burned through parts of Los Angeles County, represent insured losses are estimated at $40 billionwhich will cause a market reaction that will translate into premium pricing, Nice noted.
According to the NAIC, insurance companies adjust premiums based on a variety of factors. These include “the home's location, age, condition and replacement cost, as well as the customer's own claims history, personal characteristics such as credit score and franchise choice.”
Remodeling costs have risen sharply in recent years due to pandemic-era supply chain disruptions, labor shortages and the potential impact of tariffs on building materials such as Canadian lumber.
Nice said insurance companies also use sophisticated catastrophe models to assess risk. And these models predict more frequent and severe storms are ahead.
How to Find Home Insurance Coverage
Experts agree that home insurance is no longer a “set it and forget it” option. Here are key strategies for finding affordable homeowners insurance coverage.
1. Start early
Lewis recommended starting to buy insurance immediately after getting pre-approved for a mortgage, rather than waiting until closing approaches. This gives buyers time to factor the exact costs into their budget and adjust their home search if necessary.
Current homeowners typically receive policy renewal notices several weeks before their existing coverage is renewed for a year. If you don't like the rates, start shopping with other insurers, either directly with the major carriers, comparing quotes on marketplace websites, or using an independent insurance broker who can get quotes for you.
2. Know your coverage needs
Courtney Klosterman, a home expert at Hippo Home Insurance, emphasized the need to understand what is actually covered and what is not.
“A standard policy typically covers your home's structure, personal belongings and liability, but certain risks require separate insurance,” Klosterman said.
Some of these events include:
- Ground movements: Earthquakes and sinkholes require separate lighting.
- Normal Wear: Planned maintenance issues are not covered by standard policies.
- Flood damage: Water damage caused by flooding is not covered by standard policies. According to the Hippo Housepower 2024 report, 63% of homeowners mistakenly believe that flood insurance is included in their policy. If your home is in a federally designated flood hazard area, your lender may require you to purchase flood insurance through FEMA get approved for a home loan.
“Start by familiarizing yourself with the known risks in your area and check your declaration page to see what your policy may not cover,” Klosterman advised.
3. Shop regularly from different carriers.
Both Nice and Lewis recommend purchasing insurance companies every one to two years rather than staying with one insurance company indefinitely. You won't know how much extra you're paying unless you compare it to what else is out there.
When evaluating offers, make sure the coverage amounts for home, personal property, other structures, deductibles, personal liability and medical benefits meet your needs. Also, check for exclusions that may require separate insurance (such as flood or earthquake insurance).
“Companies will evaluate what their exposure is to any given event, and if a company has more homes in your zip code than they want to insure, they want to balance that out,” Nice said. “How do companies manage to avoid insurance in certain areas? They raise prices and let someone else come in and take less.”
4. Ask about discounts
Klosterman noted that home renovations may qualify for discounts on home insurance rates. Ask your insurer about savings on:
- Impact resistant roofing
- Professionally monitored security systems
- Plumbing, electrical, or HVAC upgrades
- Smart home devices such as leak detectors or automatic water shut-off valves.
- Combining home and automobile policies
5. Explore mitigation measures
Preventative measures can help reduce damage to your home and lower your insurance costs. And some insurers now require mitigation before insuring properties. Here are some points to consider:
- Maintain fire-resistant landscaping
- Keep your gutters clean
- Installation of suitable roofing materials
For all homeowners:
- Full regular seasonal maintenance
- Proactive maintenance of critical systems
- Make timely repairs to prevent costly damage.
6. Choose your area carefully
Lewis advised being strategic about location, especially for first-time buyers. Check to see if the areas you're thinking about purchasing are in FEMA-designated high-risk flood zones and ask an insurance broker to determine if that area has higher insurance costs than others.
“Personally, I would have a very hard time shopping in any high-risk area if it's a wind risk, a flood risk or a fire risk,” Lewis said, noting that you could have two areas of the same city, but one is in a high-risk area and the other is not — and the difference could mean paying significantly higher insurance costs.
7. Review your coverage annually.
Klosterman recommended reevaluating your coverage every year at renewal and after major life changes. These may include:
- Renovating or adding to a house
- Arrival of adult children or elderly parents.
- Experiencing significant weather events that increase risk
- Adding a home office where you do business with clients
- Installation of a swimming pool, trampoline or other elements of increased responsibility
- Mortgage repayment (which waives the lender's mandatory insurance, but should not reduce protection)
“It’s important to understand what your home insurance policy covers, how much coverage you need and what requires regular maintenance,” Klosterman said. “Every home insurance policy is different, so if you have any questions, please contact your insurance company.”
