Home Insurance Rates Have Soared 38 Percent Since 2019: LendingTree Data

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U.S. home insurance rates have rocketed by nearly 38 percent since 2019 because of a mix of soaring property values, above-trend inflation, and natural disasters, according to new data published by online lending marketplace LendingTree.

In the first three months of 2024, home insurance rates rose by 5.8 percent nationwide, led by Nebraska (13.3 percent), Illinois (12 percent), and Montana (11.6 percent). Rates were little changed in three states: Maryland (0.2 percent), Florida (0.1 percent), and Colorado (zero percent).

Cumulatively, the growth rate has been higher in Arizona (62.1 percent), Nebraska (59.9 percent), and Illinois (56.9 percent).

This year, the average cost of home insurance across the United States is $2,478 annually.

Data highlight that the annual average cost is double the national average in two states: Oklahoma ($5,478) and Nebraska ($5,363). Three states enjoyed the lowest cost of home insurance: Hawaii ($549), New Hampshire ($1,096), and California ($1,121).

Researchers noted that soaring home prices have substantially contributed to rising home insurance costs.

Median U.S. home prices have surged by more than 34 percent since 2019, reaching $420,800 in the first quarter.

Inflation has been another factor, with the cost of building materials and labor rocketing over the past five years.

The report noted that more residential properties are at risk of damage from extreme weather.

“Insurance companies have to repair more homes, and it’s more expensive to rebuild each one than it might have been just five years ago,” said Rob Bhatt, a LendingTree home insurance expert and licensed insurance agent. “When their costs of paying claims go up, they turn around and raise our rates. This is affecting prices for just about everyone, including people who haven’t been directly impacted by a natural disaster, or at least not yet.”

The trends have significantly affected household budgets, especially as the overall cost of living climbs and erodes consumers’ purchasing power.

In the same five-year window, the consumer price index has surged by almost 25 percent.

Despite sky-high premiums, Mr. Bhatt said that there are “reasons to hope that home insurance prices” will stabilize for a few years “as insurance companies have been able to bake in these higher cost projections into their higher new rates.”

Insurance Capturing Attention

The growth in homeowner insurance premiums has captured the attention of public policymakers.

In his semiannual monetary policy address to the Senate Banking Committee in March, Fed Chair Jerome Powell, for example, noted that insurance is one reason inflation remains elevated.

“Insurance of various different kinds—housing insurance, but also automobile insurance, and things like that—that’s been a significant source of inflation over the last few years,” Mr. Powell told lawmakers. “And it’s to do with a million different factors.”

He warned that insurance companies fleeing some of the country’s highest-risk areas present “a significant issue.”

During the 2024 Republican primary campaign, former President Donald Trump urged Florida Gov. Ron DeSantis to “take care of insurance because [Florida has] the highest insurance in the nation.”

The Biden administration is requesting the top insurance companies to provide detailed 2017–22 data regarding their policies, premiums, claims, and losses to help the Treasury Department “assess climate-related financial risk to consumers across the United States.”

Homeowners Feeling ‘Nervous’

A new report by Insurify states that nearly one-third (30 percent) of U.S. homeowners are “nervous” about ballooning home insurance rates because they are uncertain about future expenses.

The study anticipates a 6 percent jump in the coming year, with the average cost expected to be $2,522 by the year’s end.

In 2023, Florida topped the list of most expensive states for home insurance, totaling nearly $11,000. This was followed by Louisiana ($6,354), Oklahoma ($5,444), and Texas ($4,456).

Over the past few years, the Florida home insurance industry has cratered, with various companies leaving the market.

Several big-name insurance companies have dialed back their presence in the Sunshine State, including Bankers Insurance Co., AIG, Farmers Insurance, and Lexington Insurance.

AAA announced in July 2023 that it would not renew auto and home insurance policies for some customers in Florida because of the severity of natural disasters.

Mr. DeSantis signed legislation establishing a $1 billion reinsurance fund. The bill, which went into effect in October 2023, also includes reforms to disincentivize frivolous lawsuits.

“Costly natural disasters drive up rates and make it difficult for insurers to maintain profitability in Florida, but multiple factors fuel the state’s insurance industry crisis,” Insurify noted.

Other states are witnessing similar developments.

California’s insurance market is in a crisis, experts say, as more than a million homes are at risk of extreme wildfires. Like in Florida, major home insurers such as Allstate and State Farm stopped accepting new applications from thousands of homeowners residing in California’s fire-risk communities. Other homeowners are facing increasing premiums.

Data compiled by S&P Global reveal how much some of the largest companies in the insurance business have raised their premiums.

On a cumulative basis, Progressive has led the country in effective rate changes, with its rates soaring by more than 55 percent since 2018. Farmers Insurance (54.6 percent), American Family Insurance (48.4 percent), Liberty Mutual (43 percent), and Nationwide (41.9 percent) rounded out the top five.