Homeowners insurance costs have shot up 70% since 2021. Here's why.

Breaking down rising insurance rates

What rising insurance rates mean for homeowners in disaster zones 05:30

Homeowners insurance rates are rising across the U.S., driven by climate change, rising cost of building materials and surging home prices. 

Almost half of property insurance policy holders in the U.S. said their premiums rose over the past year, the highest rate of increases in more than a decade, according to a study this week from data analytics company J.D. Power.

Average homeowners insurance costs have risen nearly 70% over the past five years, according to data from ICE Mortgage Technology. On average, single-family homeowners with a mortgage now pay $2,370 a year for their property policy. In 2025, homeowners insurance costs rose have risen most sharply in California, where premiums in Los Angeles were up 19.5% compared to a year ago, according to the loan analytics firm.

Soaring homeowners insurance rates are leading some Americans to switch insurers, or do without coverage altogether — a risky step that can prove financially ruinous and that experts strongly discourage. 

"All things being equal, if you raise prices customers aren't happy," J.D. Power managing director Craig Martin told CBS MoneyWatch. "As premiums increase, it starts to impact how people perceive insurance, and they start to wonder if their insurer cares about them or their profits." 

Property insurance premiums vary by geography, and are typically higher in places where residents are more vulnerable to disasters such as hurricanes and wildfires that scientists link to climate change, according to insurance experts. 

"The price of insurance is increasing as the level of risk increases," said Sean Kevelighan, CEO of the Insurance Information Institute, an industry group that provides information to consumers. "We are beginning to see some trends of Americans making tougher decisions about their insurance."

According to a recent Realtor.com survey of homeowners, nearly 60% of respondents said they might forgo purchasing property coverage if it becomes too expensive. 

"Households are feeling squeezed, and more are considering going without home insurance altogether," Realtor.com economic data analyst Hannah Jones told CBS MoneyWatch. 

What's behind rising premiums?

Several factors have led to the surge in property insurance costs: higher home values, mounting climate-related risks, and the higher cost of lumber, steel and other building materials, insurance experts said. In June, the median home sale price in the U.S. hit a record high of nearly $400,000, according to online real estate firm Redfin.

"We've seen costs related to construction materials rise, and the price of insurance is a reflection of risk, plus the cost to pay a claim," Kevelighan said.

"It's a double whammy," Jones added. "If your home is worth more, it costs more to insure, and also your home is more at risk, so you stand to lose more if you go without insurance." 

"We don't recommend going without insurance because it leaves you extremely exposed in case you do suffer property damage, or a complete loss of property," she said.  

However, homeowners do have alternatives when it comes to choosing an insurer, while there are steps they can take to try to minimize their coverage costs. 

"A few of these things are under people's control," NerdWallet homeowners insurance expert Holden Lewis told CBS MoneyWatch. "If you are in a place where there are a lot of wildfires, you can change your landscaping so you don't have flammable materials, for example." 

A home that's perceived as less vulnerable is less costly to insure, he explained. 

"In storm-vulnerable areas, having storm shutters and tie-downs to keep your roof from blowing off can reduce your premiums," he added.

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