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From January 2020 through May 2026, the Pearl research team analyzed data from more than a dozen peer-reviewed academic studies, government reports, federal reserve analyses, and industry publications, including research covering more than 74 million homeowners insurance policies and escrow payment records, to understand how average home insurance costs have changed, what is driving premium variation across markets, and what new homebuyers should factor into their total housing budgets before making an offer.
The table below tracks the national average for annual homeowners insurance premiums from 2020 through 2026, year-over-year change, and insurance burden, the premium's share of a homeowner's monthly principal and interest payment.
Average home insurance cost in the United States, 2020 to 2026
| Year | Avg. annual premium | YoY change | Insurance burden (% of monthly P&I) | Cumulative change from 2020 |
|---|---|---|---|---|
| 2020 | $1,902 | — | 12.0% | — |
| 2021 | $2,016 | +6.0% | 12.4% | +6.0% |
| 2022 | $2,238 | +11.0% | 13.1% | +17.6% |
| 2023 | $2,530 | +13.0% | 14.1% | +33.0% |
| 2024 (Est.) | $2,721 | +7.5% | 15.0% | +43.1% |
| 2025 (Proj.) | $2,912 | +7.0% | 15.8% | +53.1% |
| 2026 (Proj.) | $3,086 | +6.0% | 16.5% | +62.2% |
Sources: Federal Reserve Bank of Philadelphia, Community Development Brief, May 2026.1 Keys & Mulder, NBER Working Paper 32579.2 Insurance Information Institute (Triple-I), Issues Brief, December 2025.3
Key takeaways
The average homeowners insurance premium rose 33% in just three years, from $1,902 in 2020 to $2,530 in 2023, an increase that outpaced general inflation over the same period by a wide margin.1
The acceleration was sharpest in 2022 and 2023, when year-over-year increases hit 11.2% and 13.0% respectively. Research covering 74 million mortgage escrow payments found the primary driver was a doubling of reinsurance prices between 2018 and 2023, costs that passed directly through to household premiums.2
Growth has moderated since the 2023 peak. Projections point to increases of approximately 7% in 2025 and 6% in 2026, consistent with the insurance market's return to profitability phase identified by Triple-I in its December 2025 Issues Brief.3 This is a structural tapering, not a reversal.
The insurance burden tells a more direct story for new buyers. In 2020, the average homeowner spent 12 cents of every mortgage dollar on insurance. By 2024 that figure had reached 15 cents, and by 2026 it is projected to reach approximately 16.5 cents, a meaningful addition to monthly housing costs that most affordability calculators do not account for.
A buyer purchasing in 2026 at the projected average premium of $3,086 will spend roughly $257 per month on homeowners insurance alone, before taxes, before principal, before interest.
The primary academic finding from Keys and Mulder is that the main driver of these increases is not simply claims inflation but a doubling of reinsurance prices between 2018 and 2023. Reinsurance cost increases are passed through directly to household premiums, meaning this is a structural shift in the cost of owning a home, not a temporary pricing spike.2
Premium costs vary substantially by state, driven primarily by proximity to climate catastrophe risk. The table below answers the question new buyers most frequently ask after seeing the national average: "Is my target market cheaper or more expensive than average?"
| State | Avg. annual premium (2025) | % change vs. baseline | Primary cost driver | Risk category |
|---|---|---|---|---|
| Florida | $8,292 | +231.7% | Hurricane / wind / litigation costs | High |
| Louisiana | $4,033 | +31.8% (2019 to 2024) | Hurricane / flooding / severe convective storms | High |
| California | $2,654 (Est.) | +48% (Est.) | Wildfire / FAIR Plan expansion | High |
| New Jersey | $2,095 | +26.1% (2021 to 2025) | Atlantic coastline / hurricane risk | Medium-High |
| Pennsylvania | $1,663 | +28.9% (2021 to 2025) | Rising reinsurance costs | Medium |
| Delaware | $1,549 | +25.4% (2021 to 2025) | Coastal exposure | Medium |
| US Average | ~$1,824 | +26.7% (2021 to 2025) | Climate-driven catastrophe risk | n/a |
Sources: NJ, PA, DE, and US average: Federal Reserve Bank of Philadelphia, Community Development Brief, May 2026.1 Florida $8,292: Insurify, 2026 Insuring the American Homeowner Report, March 2026.4 Average home insurance cost by state, 2025
Key takeaways
The gap between the most and least expensive states is substantial. Florida's 2025 average of $8,292 is more than five times the US sample average of $1,824 and more than twice California's estimated figure. Florida has historically been the most expensive homeowners insurance market in the country by a wide margin.4
Even mid-Atlantic states that most buyers would not consider high-risk have seen premium increases of 25% to 29% since 2021. New Jersey, Pennsylvania, and Delaware all posted cumulative growth above the national average, driven largely by rising reinsurance costs that affect all markets, not just coastal catastrophe zones.1
Louisiana presents a different risk profile from Florida: premiums are lower in absolute terms, but the cumulative increase since 2019 reflects persistent exposure to hurricanes and severe convective storms. The state has historically carried the highest insurance burden as a share of household income in the country.10,11,12
California's estimate reflects a market in structural transition. Private insurers have pulled back significantly, FAIR Plan enrollment has expanded, and the combination of wildfire risk and reduced competition is pushing the effective average cost upward even as some regulatory constraints limit filed rate increases.10,11,12
For new buyers, the practical implication is direct: the state where you buy materially changes your insurance budget. A buyer moving from Pennsylvania to Florida at comparable home prices would spend roughly five times more on annual insurance premiums.10
Most buyers with a lender-required escrow account do not realize that when an insurance premium increases mid-year, the lender recalculates the escrow balance at the next annual review. If the account is running short from a premium increase that occurred after the last review, the lender covers the deficit and then spreads the catch-up amount across the following 12 months on top of the new, higher premium base. The result is a monthly payment increase that can feel significantly larger than the underlying premium increase alone would suggest. A buyer whose premium rises $300 in a single year may see a monthly payment adjustment of $40 to $50 per month: the $25 monthly base increase plus the catch-up spread.
National averages obscure significant variation based on buyer-specific factors. The table below shows how two variables, credit score and choice of location, translate directly into premium dollars and affect the insurance burden as a share of the monthly mortgage payment.
Impact of credit score and location risk on your premium, 2024
| Borrower / property profile | Premium vs. baseline | Insurance burden (% of monthly P&I) | Notes |
|---|---|---|---|
| High credit score, low climate-risk location | Baseline (approx. $2,721 in 2024) | approx. 15% | Most favorable insurance cost scenario for budget planning |
| Low credit score, same property and coverage | +24%* | approx. 19 to 20% | Credit profile raises insurance cost by as much as it raises mortgage rate |
| High climate-risk zip code (top 5% exposure) | +$722/year** | approx. 21.4% | Climate exposure is priced into premiums regardless of individual home features |
* At 2024 national average premium levels, a 24% penalty equals approximately $337 more per year for identical coverage on the same property in the same location. ** Measured against adjacent lower-risk zip codes at equivalent dwelling values. Sources: Blonz et al., NBER WP 34848, March 2026.5 Keys & Mulder, NBER WP 32579, Data Appendix Table A12.2 Federal Reserve Bank of Philadelphia, May 2026.1
Key takeaways
A buyer's credit score affects their insurance premium in much the same way it affects their mortgage rate, yet this connection is almost never discussed in home affordability guidance. Research covering 70 million policies found that buyers in the bottom credit quintile pay 24% more for identical coverage on the same property in the same location as buyers in the top quintile.5
That 24% penalty translates to roughly $337 more per year at 2024 average premium levels, and it compounds with every other cost driver. A buyer with a low credit score purchasing in a high-risk climate zone could face an insurance burden approaching or exceeding 25% of their monthly mortgage payment before accounting for taxes.
The top 5% of climate-exposed zip codes, primarily coastal Florida, coastal Texas, and wildfire-prone California, carry a premium elevation of $722 per year above adjacent lower-risk zip codes for equivalent dwelling values.2 That is an additional $60 per month that does not show up in the listing price or the mortgage rate.
For buyers in LMI neighborhoods, the burden is compounding in a different way: premium growth rates are outpacing income growth in these markets, meaning a rising share of household income is consumed by insurance costs. The Federal Reserve Bank of Philadelphia's May 2026 brief identifies this as the sharpest affordability concern in the Third District states.1
The practical takeaway: run your insurance estimate using your actual credit profile and the specific zip code under consideration, not the national average. The gap between the best-case and worst-case scenario for an individual buyer can easily exceed $1,000 per year on the same home.
Premium costs are shaped by both market-level forces outside a buyer's control and buyer-specific variables within it. The two tables below present the documented factors that push costs higher and those that reduce them, with confirmed impact ranges and practical buyer actions.
Factors that increase home insurance cost
| Cost factor | Estimated impact | Buyer action |
|---|---|---|
| Credit score (bottom vs. top quintile) | +24%* | Compare quotes at current and projected credit score before setting a purchase timeline |
| Climate / catastrophe exposure (top 5% zip codes) | +$722/year** | Review climate risk data for target zip codes before making an offer |
| Reinsurance market conditions | Doubled 2018 to 2023; tapering | Market-level factor; not controllable at the individual buyer level |
| Replacement cost vs. purchase price gap | Coverage A limits up nearly 30% over five years*** | Request a replacement cost estimate from your insurer; do not assume coverage equals purchase price |
| Secondary deductibles: wind, hurricane, hail | Percentage of dwelling value, assessed per event**** | Request the full deductible schedule alongside the annual premium quote |
* Compared to buyers in the top credit quintile, for identical coverage on the same property.
** Compared to adjacent lower-risk zip codes at equivalent dwelling values.
*** Triple-I, December 2025. In some markets, full dwelling replacement now costs more than the purchase price. **** Example: a 2% hurricane deductible on a $500,000 home equals $10,000 out-of-pocket before insurance responds. Applies primarily in FL, LA, TX, and Atlantic coastal states.
Sources: Blonz et al., NBER WP 34848.5 Keys & Mulder, NBER WP 32579, Data Appendix Table A12.2 Triple-I, December 2025 Issues Brief.3 FLOIR, Property Insurance Stability Report, January 2026.6 GAO-26-107867.7
Key takeaways
Most of the premium growth since 2020 has been driven by structural forces: a doubling of reinsurance prices between 2018 and 2023 and an accelerating repricing of catastrophe risk in global capital markets.2 These operate at a level outside any individual buyer's control.
The two buyer-specific factors in this table, credit score and location risk, are the highest-leverage variables available before purchase. A buyer in the bottom credit quintile purchasing in a top-5% climate-risk zip code could face a combined cost impact well above $1,000 per year compared to a baseline buyer on the same property.
The replacement cost gap is underappreciated by most new buyers. Because structural replacement costs have risen nearly 30% over five years, dwelling coverage requirements in some markets now exceed the purchase price.3 Accepting a quote tied to market value rather than replacement cost creates underinsurance exposure that only becomes visible at claim time.
In wind-exposed and coastal markets, the secondary deductible is as material to total ownership cost as the annual premium. A 2% hurricane deductible on a $500,000 home represents $10,000 in out-of-pocket exposure per qualifying event before insurance responds.6
Because Coverage B (Other Structures) is automatically capped at 10% of your Coverage A limits, post-pandemic construction inflation creates a double-edged sword. While rising Coverage A limits automatically bump up your detached structure cap, rebuilding a detached garage, guest cottage, or custom pool house now costs vastly more than it did five years ago. Buyers with significant detached assets must explicitly audit this limit rather than relying on the default 10% allocation, as standalone structures are often settled on an Actual Cash Value (depreciated) basis rather than full Replacement Cost unless specified.13
Factors that reduce home insurance cost
| Feature or certification | Estimated discount | Buyer action |
|---|---|---|
| Impact-resistant roofing | 5% to 25%* | Request mitigation discount schedule from insurer; review documented roof characteristics in the home's Pearl performance profile |
| Full wind retrofit (bracing / clips) | 10% to 35%** | Verify presence via homeowner-completed Pearl performance profile; most applicable in FL, TX, LA, and Atlantic coastal states |
| Monitored fire / water sensors | 3% to 10%*** | Confirm features are present and active; verifiable via homeowner-completed Pearl performance profile |
| IBHS Fortified Home certification | 20% to 55% off wind portion**** | Request certification documentation from seller; most established in Alabama and Gulf Coast states |
Discount range is insurer and state dependent.
** Applies to hurricane-exposed markets.
*** Composite data from Triple-I 2025 and carrier-specific filings (Chubb, AAA, Farmers) 2026.
**** Applies to the wind component of the premium only, not the full policy. Range per Alabama DOI Bulletin 2016-07 and subsequent updates.
Sources: Insurance Information Institute, "12 Ways to Lower Your Homeowners Insurance Costs."8 FLOIR, Property Insurance Stability Report, January 2026.6 Alabama DOI / Strengthen Alabama Homes program.9
Key takeaways
For buyers in high-risk markets, mitigation features interact: a home with impact-resistant roofing, wind retrofit clips, and a Fortified Home designation in an Alabama coastal county could carry a combined wind portion discount that meaningfully offsets the elevated base premium for that market.
The Fortified Home certification discount, 20% to 55% off the wind portion, is the most documented and most impactful single-feature discount confirmed in this research.
It applies to the wind component only, not the full policy. Buyers in markets where wind risk represents a large share of total premium will see the largest absolute savings.
Smart home monitoring features carry modest discounts across most markets and are worth verifying during the purchase process because they document existing risk-reduction measures that may already be in place.
Three findings from this research carry direct implications for new buyers. First, homeowners insurance is now a material line item in housing affordability, not an afterthought. A buyer purchasing at the 2026 projected average premium will spend more than $3,000 per year, roughly $257 per month, on insurance alone, and that figure can vary by a factor of five depending on the state and zip code. Including insurance in affordability calculations from the beginning of a home search is not optional; it is accurate budgeting.
Second, two variables a buyer partially controls, credit score and choice of location, can each shift the final premium by hundreds of dollars per year. Understanding those variables before making an offer gives a buyer real information to act on. Third, the documented features of a specific home matter. Impact-resistant roofing, wind mitigation retrofits, and smart monitoring systems all carry measurable discount potential that a buyer can verify before purchase rather than discover afterward.
For new homebuyers, insurance cost is increasingly part of the full picture of what a home costs to own. Pearl SCORE™ gives every buyer a free Home Performance Snapshot via Pearl’s app, showing what public records and homeowner-provided data reveal about a home's baseline performance across five pillars: Safety, Comfort, Operations, Resilience, and Energy.
Scored on a 1 to 1,000 scale across approximately 97 million single-family homes in the United States, Pearl SCORE™ documents features like HVAC systems and insulation, key drivers of your Operations pillar, as well as roofing and weatherization features that impact Resilience. This is the kind of information that helps buyers go into a purchase with a clearer picture of what they are getting, including the features that affect what they may pay to insure it. Access a free Pearl Home Performance Snapshot inside Pearl app to see what public records reveal about a home's baseline performance across all five pillars (Safety, Comfort, Operations, Resilience, and Energy).
1. Federal Reserve Bank of Philadelphia. Community Development Brief: Homeowners Insurance Costs and Affordability. May 2026. https://www.philadelphiafed.org/community-development
2. Keys, Benjamin J., and Philip Mulder. Property Insurance and Disaster Risk: New Evidence from Mortgage Escrow Data. NBER Working Paper 32579. June 2024, revised November 2025. https://www.nber.org/papers/w32579
3. Insurance Information Institute (Triple-I). Trends and Insights: Homeowners Insurance. Issues Brief, December 2025. https://www.iii.org/sites/default/files/docs/pdf/triple-i_trends_and_insights_homeowners_insurance_12152025.pdf
4. Insurify. 2026 Insuring the American Homeowner Report. March 2026. https://insurify.com/homeowners-insurance/report/home-insurance-price-projections/
5. Blonz, Joshua, et al. Pricing Protection: Credit Scores, Disaster Risk, and Home Insurance Affordability. NBER Working Paper 34848. February 2026. https://www.nber.org/papers/w34848
6. Florida Office of Insurance Regulation. Property Insurance Stability Report. January 2026. https://floir.gov/docs-sf/default-source/property-and-casualty/stability-unit-reports/january-2026-isu-report-final.pdf
7. U.S. Government Accountability Office. Report GAO-26-107867: Homeowners Insurance Trends and Consumer Challenges. https://www.legistorm.com/reports/view/gao/109106/Premiums_Generally_Tracked_Inflation_but_Rose_More_in_Disaster_Prone_Areas.html
8. Insurance Information Institute. 12 Ways to Lower Your Homeowners Insurance Costs. https://www.iii.org/article/12-ways-to-lower-your-homeowners-insurance-costs
9. Alabama Department of Insurance. Strengthen Alabama Homes Program. https://www.strengthenalabamahomes.com/
10. Cragg, M. (2010). The impact on the U.S. insurance market of H.R. 3424 on offshore affiliate reinsurance. The Climate Change and Public Health Law Site, 1–18.
11. Hartwig, R. P. (2010). Residual market property plans. Insurance Information Institute, 1–25.
12. Semenova, A. (2026). Climate change risks and the systemic threat to the US homeowners insurance market. Levy Economics Institute of Bard College, Working Paper No. 1115, 1–32.
13. Cookson, J. A., Gallagher, E., & Mulder, P. (2024). Coverage neglect in homeowners insurance. Federal Reserve Bank of Philadelphia Working Paper Series, 25-09. https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2025/wp25-09.pdf
