Home Insurance Costs Surged 34% in Last Five Years. Texas, Colorado Lead Growth

Spiking home insurance costs

The rising prominence of climate change impacts and natural disaster frequency are causing rapid growth in home insurance rates.

Across the U.S., home insurance costs jumped by 33.8% from 2018 to 2023, going as high as 60% in certain places, according to Realtor.com.

See which states saw the largest and smallest increases in home insurance rates over the past five years.

Where home insurance rates grew rapidly

With natural disasters becoming more extreme, home insurance premiums are soaring and insurers are even dropping their coverages in places deemed too prone to environmental property damage, like California, Florida, and Louisiana.

More alarming still, billion-dollar weather events are following a rapidly progressing uptrend, according to the National Oceanic and Atmospheric Administration. Adjusted for inflation, a combined 37 of these events took place from 2004 to 2008, before stepping up to 55 from 2009 to 2013, 71 from 2014 to 2018, and 102 from 2019 to 2023. Last year (2023) also broke the single-year record with 28 events.

A 44.8% of U.S. homes, valued at about $22 trillion, face at least one type of severe or extreme climate risk (flood, wind, wildfire, heat, or air quality), according to Realtor.com’s 2024 Housing and Climate Risk Report. As the escalating effects of global warming increase and spread, housing insurance costs are following suit.

Realtor.com analyzed S&P Global Market Intelligence homeowner rate filings submitted to the Department of Insurance for 10 largest homeowners insurance underwriters in each state from 2018 to 2023. It found overall insurance costs in the U.S. shot up 33.8% in that timeframe.

Broken down by state, Texas saw the largest growth, spiking 59.9% in those five years. Colorado came next at 57.9%, followed by 52.9% in Arizona, 51.9% in Utah, and 48.6% in Nebraska.

On the opposite end of the spectrum, Vermont had the smallest gains at 5.8%. Alaska trailed at 6.4%, then West Virginia, South Carolina and Maine rounded out the bottom five with increases of 8.8%, 9.2% and 11.7%, respectively.

“Climate risk is a big deal. It can impact home values, insurance costs, and the overall stability of a housing market,” said Jiayi Xu, economist at Realtor.com. “The issues are whether you can get access to affordable insurance and how much the costs will increase. In areas with high climate risk and lower home prices, people are tolerating these risks in exchange for more affordable housing.”

The table below shows the growth percentage in home insurance rates in every state between 2018 and 2023, according to Realtor.com.

Advice for home buyers

As the impacts of climate risks increase, the price of home insurance will likely grow alongside them.

But just like mortgage rates, you should shop around and negotiate when locking in your homeowners insurance. You may need to purchase additional coverage depending on the risks your property faces, so be sure you cover everything you need when comparing policies. Homeowners in high climate risk areas also have distinct things to consider and ways to mitigate potential damages.

If you’re ready to become a homeowner, reach out to a local mortgage lender to get started.