Home Insurance Costs and Real Estate

Homeowners insurance has become a larger part of the cost of owning a home. Buyers once focused mostly on the sale price, mortgage rate, and property taxes. Insurance now deserves the same attention because it can change the monthly payment enough to affect whether a buyer qualifies for a loan.

Home insurance helps cover certain losses from fire, wind, theft, storms, and some forms of water damage. The details depend on the policy. Flood coverage usually requires a separate policy, and wind or hurricane coverage can carry separate deductibles in higher-risk areas.

Mortgage lenders usually require insurance when a buyer finances a home. The property serves as collateral for the loan. If a fire, hurricane, or other covered event destroys the house, the lender wants the structure insured.

A full monthly housing payment often includes principal, interest, property taxes, and insurance. People call that PITI. A lower-priced home can still cost more each month if it carries high taxes or an expensive insurance policy.

Home insurance premiums rose about 70 percent nationwide between 2019 and 2025. By 2025, the average homeowner’s premium represented roughly 14 percent of the monthly payment that included mortgage principal and interest. In 2013, that share stood closer to 10 percent.

Climate risk has played a large role in the increase. Hurricanes, wildfires, flooding, hail, tornadoes, windstorms, and severe rainfall can produce expensive claims. Insurers look at past losses, local risk models, and the expected cost of future claims when setting rates.

A coastal home can show how location affects the numbers. Two houses may have the same sale price and similar size. The home near the coast may cost far more to insure because of hurricane and wind exposure. Over several years, that difference can add thousands of dollars to the owner’s housing cost.

Insurance companies also face higher rebuilding costs. Labor, lumber, roofing materials, appliances, and other construction expenses can rise after a disaster. If a home costs more to rebuild, the insurer may need to charge more for coverage.

The condition of the property matters too. An older roof, outdated electrical panel, aging plumbing, or prior claims can raise the premium. Some insurers will require repairs before issuing a policy. A buyer may need to replace a roof or update parts of the home before closing.

A deductible affects both the premium and the owner’s risk. The deductible is the amount the homeowner pays before insurance coverage begins for a covered claim. A higher deductible can reduce the annual premium. It can also leave the owner with a large out-of-pocket bill after a storm or fire.

Some homeowners receive nonrenewal notices. That happens when an insurer chooses not to continue the policy after its current term ends. The company may be reducing exposure in a region, responding to repeated claims, or changing its standards for roofs, age of homes, or property location.

When insurers pull back from an area, homeowners can lose options. Less competition can lead to higher prices, fewer coverage choices, larger deductibles, and tougher underwriting requirements. Some homeowners turn to state-backed insurance plans when private insurers decline to write a policy.

State-backed plans can keep coverage available when the private market will not. They may come with higher premiums, stricter terms, lower limits, or other tradeoffs. Buyers should compare the coverage itself, not just the price.

Florida, Louisiana, and Oklahoma have ranked among the most expensive places for homeowners insurance. Estimates vary because the cost changes with the coverage amount, deductible, age of the home, roof type, and exact location. A 2026 rate analysis placed average annual coverage for a Florida home with $300,000 of dwelling protection at about $7,136. Comparable averages came in around $5,185 in Louisiana and $5,378 in Oklahoma.

Insurance can affect the sale of a home. A buyer may like a property near the beach, in the woods, or in a storm-prone region. High premiums can push the monthly cost beyond the buyer’s budget. That may reduce the number of qualified buyers and make the home harder to sell.

Mortgage approval depends on the full housing payment. A lender considers principal, interest, taxes, and insurance when reviewing debt-to-income ratios. A buyer who could have qualified for a property a few years ago may not qualify today if insurance costs rise sharply.

First-time buyers may feel the effect more than other buyers. They often have less cash available after the down payment and closing costs. A larger-than-expected insurance bill can change the budget for repairs, furniture, emergencies, and daily expenses.

Condominiums and townhouses have their own insurance issue. The homeowners association usually insures the building’s common structure and shared areas. If the association’s insurance bill rises, the higher cost can show up in monthly dues or special assessments.

In 2026, typical condos and townhouses in areas facing severe or extreme climate risk had median monthly HOA fees of $548. That was $198 higher, or 56.6 percent more, than similar properties in relatively lower-risk areas. The insurance cost may not appear as a separate line on the owner’s policy, but it can still raise the monthly cost of living there.

Homeowners can sometimes lower premiums by reducing risk. A new roof, impact-resistant windows, hurricane shutters, fire-resistant materials, updated plumbing, improved drainage, smoke alarms, and security systems may help. The savings can vary, and upgrades may cost more than the discount in the short term.

Buyers should request insurance quotes early. Waiting until the final week before closing can create a serious problem if the home sits in a flood zone, wildfire-prone area, coastal region, or neighborhood with limited insurer options. A quote should cover the actual property, not just a rough estimate based on the city.

Sellers can help by keeping records of upgrades. A recent roof replacement, electrical update, wind-mitigation work, fire-resistant landscaping, or past insurance history may help a buyer understand the property’s risk. It does not guarantee low premiums, but it can reduce uncertainty.

Investors need to treat insurance as a core expense. A rental property may look profitable based on the purchase price and expected rent. A large increase in insurance can remove much of that profit. Owners should build room into their projections for future premium increases, deductibles, vacancies, repairs, and local taxes.

Home insurance now affects affordability, financing, resale value, rental returns, and location choices. A home can look affordable at the listing price and become expensive once taxes, insurance, maintenance, and financing are added. Buyers who compare insurance costs early can avoid one of the most costly surprises in real estate.