In the next two years, American homeowners may face a new wave of rising insurance premiums. According to real estate analysis company Cotality, due to frequent natural disasters and increasing costs of rebuilding houses, home insurance premiums are expected to increase by an average of 8% in 2026, followed by another 8% in 2027, with a potential cumulative increase of up to 16% over the two-year period.
John Rogers, Chief Data and Analytics Officer of Cotality, stated that insurance premiums have been “significantly increasing” in recent years, with some areas experiencing double-digit increases. He pointed out that insurance premiums now account for 9% of the average monthly expenses of American homeowners, representing the highest average proportion of personal expenditure ever in terms of principal, interest, property taxes, and insurance costs.
Danielle Hale, Chief Economist of Realtor.com, told FOX Business that the rising costs of house rebuilding are one of the main drivers behind the increase in premiums, reflecting overall inflation and specific trends in the housing supply chain.
“Frequent disasters lead to exacerbated losses, increased claims, and insurance companies are working hard to address this trend,” she said, noting that insurance companies are adjusting rates in response.
Hale noted that Realtor.com’s research shows that “a significant portion of housing in the U.S.” actually faces severe or extreme climate risks, with over 6% at risk of flooding, 18% threatened by wind disasters, and 6% exposed to wildfire risks.
In a September report, Realtor.com highlighted coastal areas dominating the rankings for severe or extreme flood risk, with the Miami-Fort Lauderdale-West Palm Beach area in Florida topping the list. Approximately $306.8 billion worth of homes are at high flood risk, accounting for 23.2% of the total residential property value in the area.
Experts warn that the continued rise in insurance premiums will put added pressure on the already fragile housing market. High interest rates and persistently high home prices have already pushed many buyers out of the market.
Hannah Jones, Senior Economic Research Analyst at Realtor.com, pointed out, “Unexpected increases in home insurance premiums could catch homeowners off guard and deter potential homebuyers estimating monthly housing expenses. In any case, rising insurance costs will dampen home buying demand and make the stability of housing in certain markets even more fragile.”
(Adapted from a report by FOX Business)