Rising Insurance Costs

In 2024, just over 65% of American households—roughly 85 million—were owner-occupied. Of those, nearly 90% carried homeowners insurance. If you’re one of them, chances are you’ve felt the sting of rising premiums.

Since 2019, homeowners' insurance rates have climbed about 38% nationwide, with some regions hit even harder. A few states have seen increases of over 50%, while others have experienced more “modest” (and I use that term loosely) hikes of 10–15%. As of this year, the national average annual premium is $2,329 for a $300,000 home. Whether you own or rent, insurance costs impact your bottom line—either directly through your own premiums or indirectly through higher rent as landlords pass along the costs.

So what’s driving this spike in insurance costs? There’s no single culprit, but a few key factors are doing most of the damage.

1. Natural Disasters Are Becoming More Frequent—and Expensive. We’ve seen a rise in extreme weather events: floods, tornadoes, wildfires, hurricanes—you name it. Insurance companies aren’t just reacting to past claims; they’re bracing for future ones. And to do that, they’re raising premiums today to cushion for tomorrow.

2. Inflation Is Hitting Construction Costs Hard. We’ve all felt inflation at the grocery store and the gas pump, but it’s also pushing up the cost of rebuilding homes. Labor, materials, and logistics are more expensive than ever. When it costs more to repair or replace a home, insurance companies have to pay out more on claims, and that cost circles right back to us.

3. They Just Don’t Build ’Em Like They Used To. You’ve heard it before—and in this case, it’s true. Many older homes were built with higher-quality materials and craftsmanship. Today’s construction often emphasizes cost-efficiency over durability. That means more homes made of lightweight materials like wood frames instead of brick, which translates into greater vulnerability to storms and fires, and more total losses instead of repairable damage.

4. Reinsurance: The Insurance Behind Insurance. Here’s a lesser-known factor with a big impact: reinsurance. It’s basically insurance for the insurance companies. Reinsurers step in to cover part of the losses when claims exceed certain thresholds. As claims rise and rebuilding costs soar, reinsurers have increased their rates too. And just like everything else in the economy, those costs trickle downhill, landing right on our doorstep.

When you add it all up—weather disasters, inflation, declining construction quality, and reinsurance premiums—it’s no surprise insurance costs are going up. The bottom line? Whether you’re a homeowner or a renter, this is a shared burden. And unfortunately, it’s one more example of how macroeconomic trends and global challenges hit close to home—literally.

Jesse Brewer is a real estate investor, broker, and elected county commissioner in Boone County, Kentucky.