Home Insurance Costs Are Rising: What Today’s Buyers Need to Know

Buying a home is one of the biggest financial decisions you’ll ever make—and homeowner’s insurance plays a critical role in protecting that investment. Think of it as the safety net for your home and everything in it.

According to NerdWallet, a standard homeowner’s insurance policy typically:

• Covers repairs or rebuilding costs if your home is damaged by fire, storms, or other covered events

• Protects your personal belongings, including furniture, electronics, and clothing

• Provides liability coverage if someone is injured on your property

That peace of mind is essential—but it’s becoming more expensive. Home insurance costs have been climbing, and buyers need to be prepared.

Why Home Insurance Premiums Are Increasing

Insurance premiums are rising for a few key reasons. According to the Insurance Research Council (IRC), the biggest drivers are:

• More frequent and severe natural disasters, leading to a higher volume of claims

• Rising construction costs, including materials and labor, which make repairs and rebuilds more expensive

When insurers pay out more—and at higher costs—those expenses are passed on to homeowners through increased premiums.

The good news? While costs are still going up, the pace of those increases appears to be slowing. Data from ResiClub and Cotality shows:

• Insurance premiums rose about 14% annually in 2023 and 2024

• In 2025, increases slowed to roughly 10%

• For 2026 and 2027, increases are projected to be closer to 8% per year

That’s still an increase, but it’s a sign the sharpest jumps may be behind us.

Lower Mortgage Rates Can Help Offset Higher Insurance Costs

There’s another bright spot for buyers: mortgage rates have been trending lower. That can help balance out higher insurance and tax costs.

As Michael Gaines, Senior VP of Capital Markets at Cardinal Financial, explains:

“Rising taxes and insurance do create pressure, but they don’t erase the benefits of a lower rate. A small rate improvement, paired with the right loan program and smart planning, can still make homeownership possible.”

In other words, affordability isn’t about one expense—it’s about how all the pieces fit together.

Insurance Costs Vary by Location

How much you’ll pay for homeowner’s insurance depends on several factors, including:

• The price of the home

• The location and local risk factors

• The amount of coverage you choose

Just like home prices, insurance premiums vary widely by state and even by neighborhood. Reviewing local averages can give you a helpful starting point when building your budget.

How Buyers Can Manage Rising Insurance Costs

Your first insurance payment is typically included in your closing costs, but after that, it becomes a recurring monthly or annual expense. Knowing costs are rising helps you plan realistically from the start.

If you’re looking to save, these tips from Insurify and NerdWallet can help:

• Shop around and compare quotes from multiple insurers

• Bundle policies, such as home and auto, for discounts

• Ask about available discounts you may qualify for

• Highlight home upgrades like a new roof or storm-resistant features

• Maintain strong credit, which can lead to lower premiums

If you’re planning to buy a home, homeowner’s insurance is an expense you can’t afford to overlook.

While premiums are rising, understanding what to expect—and knowing how to shop smart—can help you stay within budget without sacrificing coverage. After all, this insurance protects what’s likely your biggest investment, and that’s not something worth cutting corners on.