Home Insurance Costs Are Rising: What Buyers Need To Know

Buying a home is one of the largest financial decisions you’ll ever make. And homeowners insurance is what protects that investment. Think of it as your financial safety net.

A standard homeowners policy typically helps:

Cover Repairs or Rebuilding Costs – If your home is damaged by fire, storms, or other covered events, insurance can help pay for repairs — or even a full rebuild if necessary.

Protect Your Personal Belongings – Furniture, electronics, clothing, and even jewelry may be covered if they’re stolen or damaged.

Provide Liability Coverage – If someone is injured on your property, your policy can help cover medical expenses or legal costs.

That peace of mind is essential. But lately, it’s becoming more expensive.

Why Insurance Premiums Are Increasing

Home insurance premiums have been climbing nationwide, and there are clear reasons behind it.

According to the Insurance Research Council (IRC), severe weather events and natural disasters are occurring more frequently, leading to a higher number of claims. At the same time, the cost of construction materials and labor has increased significantly.

When insurers pay more to repair or rebuild homes, those higher costs are reflected in rising premiums.

Recent data from ResiClub and Cotality shows just how much rates have increased:

• 2023 and 2024: Up 14% annually

• 2025: Up about 10%

• 2026 and 2027: Projected to rise around 8% per year

While costs are still increasing, the good news is the pace of growth appears to be slowing.

There’s another silver lining, too. Mortgage rates have recently begun trending downward. 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. It’s less about one factor canceling another out, and more about helping buyers layer the right solutions together.”

In other words, smart planning can help balance rising insurance costs.

Costs Vary by Location

Insurance premiums aren’t one-size-fits-all. Your costs will depend on:

• The price of the home

• The property’s location

• Local weather risks

• The coverage limits you choose

• Your deductible amount

Just like home prices, insurance costs can vary widely by state and even by neighborhood. That’s why it’s important to get personalized quotes early in the buying process.

What Buyers Can Do To Manage Costs

Your first insurance payment is typically included in your closing costs. After that, it becomes part of your ongoing monthly housing expenses. Planning ahead ensures you’re budgeting accurately and avoiding surprises.

If you’re looking to reduce your premium, consider these strategies recommended by Insurify and NerdWallet:

Shop Around – Get quotes from multiple insurers to find competitive pricing.

Bundle Policies – Combining home and auto insurance often results in discounts.

Ask About Discounts – You may qualify for savings based on security systems, loyalty, or claim-free history.

Highlight Home Improvements – Upgrades like a new roof, storm shutters, or updated plumbing can reduce risk — and your premium.

Strengthen Your Credit – In many states, a higher credit score can lead to better insurance rates.

The Bottom Line

If you’re planning to buy a home, don’t overlook homeowners insurance in your budget.

Yes, premiums are rising. But understanding what’s driving those increases — and knowing how to shop strategically — can help you make informed decisions.

This isn’t coverage you want to cut corners on. It’s the protection that safeguards what will likely be your biggest investment.

And with the right planning, homeownership is still very much within reach.