Why Homeowner’s Insurance Costs Are Rising (and What You Can Do)

What Rising Home Insurance Costs Mean If You’re Buying a Home

Buying a home is one of the biggest purchases you’ll ever make. Homeowner’s insurance is what protects that investment. Think of it as your safety net.

Homeowner’s insurance helps cover repair or rebuild costs after events like fires or storms, protects your personal belongings if they’re damaged or stolen, and provides liability coverage if someone gets hurt on your property. It’s essential coverage, but lately, it’s also getting more expensive.

Why Home Insurance Costs Are Rising

Insurance premiums have been climbing for a pretty straightforward reason: it costs more to fix homes than it used to.

According to the Insurance Research Council, severe weather events and natural disasters are happening more often, which leads to more claims. At the same time, labor and building materials are more expensive. When insurers pay more to rebuild or repair homes, those costs get passed along to homeowners.

Recent data shows just how much premiums have increased year over year. The good news? While prices are still rising, the pace appears to be slowing.

Industry analysts at ResiClub and Cotality report:

• Insurance costs jumped about 14% in both 2023 and 2024

• In 2025, increases slowed to roughly 10%

• In 2026 and 2027, increases are expected to average closer to 8%

Still not ideal, but better than the sharp spikes we saw earlier.

Lower Mortgage Rates Can Help Offset the Increase

There’s another piece of the puzzle that helps balance things out. While insurance costs are climbing, mortgage rates have come down from recent highs.

That matters. A lower interest rate can reduce your monthly mortgage payment, helping offset higher insurance premiums. As Michael Gaines, Senior VP of Capital Markets at Cardinal Financial, puts it: rising taxes and insurance add pressure, but they don’t erase the benefits of lower rates. Smart loan selection and planning still make homeownership achievable.

In other words, it’s not about one cost canceling out another. It’s about how all the pieces work together.

Insurance Costs Vary by Location

Home insurance isn’t one-size-fits-all. Premiums depend heavily on where you buy, the price of the home, coverage limits, deductibles, and local risk factors like weather or wildfire exposure.

That’s why it’s important to look at insurance as part of your full monthly budget—not an afterthought. Your first year’s premium is usually rolled into your closing costs, but after that, it becomes an ongoing expense you’ll want to be comfortable with long term.

How Buyers Can Keep Insurance Costs in Check

While you can’t control the market, you can control how you shop. A few smart moves can make a real difference:

Shopping around for quotes from multiple providers
Bundling home and auto policies for discounts
Asking about available discounts you may qualify for
Highlighting home upgrades like a new roof or storm-resistant features
Improving your credit score, which can impact your premium

A little homework here can save you hundreds, or more over time.

Bottom Line

Homeowner’s insurance is rising, but it’s also non-negotiable. It protects what’s likely your biggest asset.

If you’re planning to buy, the key is knowing what to expect, budgeting realistically, and shopping smart. When insurance, mortgage rates, and home prices are looked at together, you’ll get a much clearer picture of what you can comfortably afford.

Thinking about buying and want help running the real numbers?
A local agent and trusted lender can help you factor insurance into your full budget so there are no surprises down the road.

Amber Johnson, Founder
Pillar Real Estate
805.835.3425
[email protected]
1345 Park St. Paso Robles, CA 93446
DRE# 01925434