New Homeowners Hit with Buyer’s Remorse Over Higher-than-Expected Insurance Premiums

There are some homeownership costs you expect to pay – like a mortgage. Others, like the high cost of maintenance and insurance, can surprise you.

New homeowners across the United States are increasingly being hit with buyer’s remorse over higher-than-expected insurance premiums.

According to a recent study from J.D. Power, homeowners insurance premiums have risen 70% across the United States, on average. In the last year alone, almost half (47%) of homeowners insurance customers have experienced a premium increase.

The average homeowner now pays around $2,370 per year for homeowners insurance on a single-family home, according to ICE Mortgage Technology. In some states, homeowners insurance premiums have nearly doubled in the last few years. In California, premiums are up 19.5% compared to where they were last year.

All of these increases are impacting new homeowners.

Insurance Bill “Keeps Going Up Despite Not Filing a Claim…”

One realtor interviewed by Bankrate claims clients have dropped deals because insurance premiums “killed the figures.”

Clients run the numbers and verify the mortgage and property taxes fit within their budget, only to find they can’t afford a high homeowners insurance bill.

I have been forced to advise some clients to abandon great homes due to the fact that the insurance premiums killed the figures.

Making things worse for homeowners, premiums continue to rise despite a lack of changes. Homeowners haven’t made a claim, let coverage lapse, or adjusted coverage in any way, yet they’re seeing significant rises in homeowners insurance – even rises as high as 300%:

The premium then increased more than threefold without any explanation.

Many new homebuyers lock into a 30-year mortgage and expect to have fixed home costs for the next 30 years. Unfortunately, property taxes and insurance premiums can increase, straining homeowners who are already struggling with affordability.

Insurance Costs Should Be “One of the First Things” to Consider When Buying a Home in Certain States

In some states, insurance is a minor consideration: you may live in a low-risk area with plenty of insurance choices.

In other states, however, insurance is one of the first things to consider when buying a home. It may be difficult to buy insurance through the open marketplace, for example. The home may be in a high-risk flood zone or wildfire area.

The five most expensive states for homeowners insurance, according to Kiplinger, include:

1. Nebraska ($6,366 per year)
2. Louisiana ($6,274)
3. Florida ($5,761)
4. Oklahoma ($4,613)
5. Kansas ($4,402)

Some of the cheapest states for homeowners insurance, meanwhile, include Hawaii ($749 per year, on average), Nevada ($961), Maine ($1,235), and Delaware ($1,423).

Insurance is Non-Negotiable When Getting a Mortgage

As Bankrate explains, insurance isn’t an option for new homebuyers. Virtually every mortgage lender in the country requires you to have homeowners insurance.

If you can’t get insurance, you can’t get a mortgage. If you can’t get a mortgage, then you can’t buy a home (unless paying cash).

Realtors emphasize factors like location, interest rate, and the price of a home. However, insurance is becoming an increasingly important factor to consider – and it’s a factor impossible to ignore.

Why is Insurance Becoming Harder to Get?

Homeowners insurance is becoming harder to get and more expensive.

The overarching reason is market dynamics: when homes become too risky to insure in a specific area, insurers can pull out or increase premiums. The more insurers pull out, the fewer options homeowners have, driving up premiums even further.

According to Bankrate, higher homeowners insurance premiums are “largely spurred” by one specific cause: extreme weather events. When tornadoes, wildfires, or hurricanes damage a large group of homes in an area, homeowners insurance premiums inevitably go up.

In 2024, extreme weather events caused an estimated $140 billion in insured losses globally, according to Munich Re, making it the third costliest year in recorded history. Two of the most expensive disasters were hurricanes Milton and Helene. In comparison, extreme weather caused an estimated $106 billion in insured losses in 2023.

Will High Insurance Premiums Drop Home Values?

Home values are closely tied to insurance availability.

The harder it is to buy insurance, the fewer homebuyers there will be.

When insurers pull out of an area and create “insurance deserts,” it creates multiple problems. Existing homeowners pay higher premiums and have fewer options. New homebuyers struggle to make the numbers work.

Inevitably, these factors lead to declining home values. High insurance premiums and low insurance availability reduce demand, making it harder to sell a home and driving prices down.

Final Word: Two-thirds of Americans Own a Home

Homeowners insurance may feel expensive – and it is. However, homeownership remains high across the United States.

Nationwide, approximately 65.1% of people, or around 2 out of 3 people, own a home as of 2025. That’s a small drop from 2000, when around 67.1% of Americans owned a home. However, it’s comparable to many other industrialized nations, where homeownership rates tend to hover between 60 and 70%.

If you’re having trouble managing high homeowners insurance premiums, take action. Compare insurers, adjust deductibles and coverage, and ensure you’re not overinsured or underinsured.

Or, if you’re struggling with an insurance claim, contact ClaimsMate for a no-cost claim review.