Homeowner insurance premiums expected to jump 16% over next 2 years

Homeowners could see insurance premiums rise another 16% over the next two years due to rising natural disasters and rebuilding costs.

Average homeowner’s insurance premiums are expected to rise 8% in 2026, followed by another 8% in 2027, real estate analytics firm Cotality predicted at an annual real estate conference.

These premiums have been “rising dramatically” over the past few years, with some areas seeing double-digit growth, explained John Rogers, chief data and analytics officer at Cotality.

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Insurance now accounts for 9% of a typical homeowner’s payment in the United States, “the highest average person’s spending on record in terms of principal, interest, property tax, and insurance premiums,” Rogers said.

The rising cost of rebuilding, a reflection of both overall inflation and some specific housing supply chain trends, is pushing those premiums higher, Danielle Hale, chief economist at Realtor.com, told FOX Business.

Hill also said that “repeated disasters have led to more damage and increased claims, trends that insurance companies are trying to get ahead of.”

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Realtor.com research revealed that “a significant portion of the U.S. housing stock” already faces extreme or extreme weather risks, ranging from more than 6% for floods, 18% for wind risks, and 6% for wildfires, according to Hill.

The higher cost of remodeling drives up those premiums, Danielle Hale, chief economist at Realtor.com, told FOX Business. (Patrick T. Fallon/AFP via Getty Images)

Hill said real estate worth trillions of dollars is at significant risk.

In a September report, Realtor.com noted that coastal markets dominate the list of metropolitan areas with the highest dollar values ​​for homes at high or severe flood risk, although the Miami-Fort Lauderdale-West Palm Beach, Fla., market ranks first.

About $306.8 billion of total home values ​​are at risk, representing 23.2% of the region’s total home value.

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About $307 billion in total home values ​​are at risk in the Miami-Fort Lauderdale-West Palm Beach, Florida, metro area. (Jeffrey Greenberg/UCG/Universal Images Group via Getty Images)

This higher cost could deter buyers in an already stagnant housing market. Many have been pushed to the margins by the ongoing affordability crisis, as high interest rates and rising housing costs have made it difficult for people to move around.

“An unexpected increase in the cost of homeowners insurance can catch current homeowners by surprise and can also discourage potential buyers trying to estimate monthly housing expenses,” he says.

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This rise in premiums may discourage potential buyers trying to estimate monthly housing expenses, Hannah Jones, senior economic research analyst at Realtor.com, said in a recent report.

“In both cases, higher insurance costs could contribute to weak buyer demand and further stabilize fragile housing in already weak markets,” Jones said.