The average American homeowner is expected to pay around $3,057 for property insurance this year, a 4% increase on last year and the fifth consecutive annual rise. Measured from 2021, premiums are up 46%, roughly three times the increase in consumer prices over the same period.
That gap is the interesting part. When one line in a household budget rises at triple the rate of everything else for five straight years, the explanation is usually not monetary. It is that the thing being priced has changed.
What an insurer is actually charging for
A property premium has three components: expected losses, the cost of the reinsurance the insurer buys to cover the tail, and expenses plus profit. All three have moved, and the first two have moved a great deal.
Expected losses are driven less by hurricanes than most people assume. Severe convective storms, which is the industry's term for tornadoes, hail and destructive straight line winds, have produced insured losses above $42 billion a year for three consecutive years. These are not rare catastrophes; they are frequent, widely distributed events that hit states with no coastline at all.
Rebuilding cost is the other half. A policy promises to replace the house, so the premium tracks construction labour and materials rather than the home's market value. Construction costs rose sharply and have not come back down, which means the sum insured rose on every policy whether or not the homeowner noticed.
Why the increases land where they do
Whitmore's Watchlist:
ALL (The Allstate Corporation): A large personal lines insurer, where this repricing shows up directly in results.
TRV (The Travelers Companies, Inc.): Personal and commercial property, with a long record through previous cycles.
RNR (RenaissanceRe Holdings Ltd.): Reinsurance, the layer whose cost sits inside everybody else's premium.
The state rankings surprise people. In 2025 six states saw premiums rise more than 20%, led by Minnesota at 34%, Colorado at 33%, Nebraska at 25% and Oklahoma at 24%. Florida remains the most expensive at close to $8,500, more than double the national average, but the fastest increases have been inland.
That is the convective storm map, not the hurricane map. Hail and wind exposure runs through the middle of the country, and those states had been priced for a loss frequency that no longer matches the record.
For an investor the mechanism is worth understanding because it works in both directions. Insurance is one of the few businesses where the cost of goods sold is not known until after the sale. When losses run above the assumption, the industry raises price, and because rate changes need regulatory approval they arrive late and then persist. The result is a cycle in which several bad years are followed by several very profitable ones, and the market tends to price the current year rather than the cycle.
The part that reaches the rest of the economy
More than half of homeowners say they have made financial sacrifices to afford coverage, and close to 30% say they would drop it if they could. In practice many are doing a version of that already, by raising deductibles, reducing coverage limits or declining wind and hail endorsements.
That matters beyond the household. A mortgage requires insurance, so premium growth of this size changes the monthly payment on a house without changing the price of the house or the rate on the loan. Combined with a thirty year mortgage near 7%, it is a meaningful part of why housing affordability has not improved even where prices have flattened.
It also affects where people can live, and therefore property values. A market where coverage is unavailable at any sensible price eventually becomes a market where buyers cannot get a mortgage, and that shows up in the price long before anything physical happens to the houses.
The practical response is unglamorous. Shop the policy annually rather than letting it renew, because the dispersion between carriers has widened enormously; check that the dwelling coverage reflects current rebuilding cost rather than an old estimate; and read what the deductible actually is for wind and hail, which is often a percentage of the insured value rather than a flat sum.
Whitmore's Take: Five years of increases at triple the inflation rate is a repricing of risk, not a temporary squeeze, and it is unlikely to reverse. Worth treating the premium as a real line in the cost of owning property rather than as a bill that arrives once a year.
Written by Daniel Whitmore
Millionaire Insiders