You don’t have to live in a hurricane zone or wildfire corridor to feel the sting of rising homeowners insurance bills. Premiums are climbing all across the country, and the numbers paint a startling picture: Between 2017 and 2021, the average annual cost of homeowners insurance in the United States soared from about $1,211 to $1,398—a more than 15% jump—according to the National Association of Insurance Commissioners.
And it doesn’t end there. A 2023 report by the Insurance Information Institute found that premiums rose by nearly 7% from the previous year alone, one of the largest single-year hikes in the past decade. Factors like more frequent natural disasters, inflation in construction costs, and higher property values are all playing a role. So how can you protect your home without breaking the bank? Read on for insights and advice from the Thumann Insurance Agency.
Weather Takes the Blame
Two big factors are driving up homeowners insurance premiums: more frequent severe weather, and higher building costs when repairing damage, according to industry experts. We’re still waiting on the final numbers for damages from Hurricane Helene and Hurricane Milton in 2023, but we already know that Hurricane Ida in 2021 and Hurricane Ian in 2022 caused tens of billions of dollars in property damage—making them two of the most destructive storms in the past decade.
The Insurance Information Institute reports that 2021 and 2022 each set records for insured losses, with $106 billion and $114 billion in claims, respectively. Many insurers are now passing these costs on to their policyholders. In Florida, homeowners saw a 40 percent spike in premiums in 2023, and in Louisiana, residents in high-risk areas faced an average 63 percent rate hike—affecting about one in 10 insured homeowners there.
It’s not just hurricanes, either. Tornadoes, hailstorms, and wildfires also pile on extra costs. In 2023, residents in wildfire-prone Arizona were hit with an average premium jump of 21.8 percent, Texans absorbed a 23.3 percent increase, and Utah homeowners saw an uptick of 20.3 percent. Premiums in Colorado climbed by 11.8 percent, in Illinois by 18.5 percent, and in Louisiana by 13.7 percent, according to S&P Global Market Intelligence.
At the Thumann Insurance Agency, we’ve seen how these factors affect homeowners right here in Texas. While there’s no way to stop a storm, being informed can help you make smarter insurance choices to protect your home and budget.
Population Growth and Increased Traffic in Dallas
Another factor contributing to higher insurance rates in the Dallas area is the city’s rapid population growth. According to the U.S. Census Bureau, the Dallas-Fort Worth-Arlington metro added over 97,000 residents between July 2020 and July 2021—more than any other metro region during that time. More people on the roads typically results in more traffic accidents, driving up claims costs for insurers. While this trend directly impacts auto insurance, it can also have an indirect effect on homeowners insurance. An influx of new residents increases demand for housing, potentially raising property values and further influencing premium costs.
Building Inflation Packs a Punch
Soaring construction costs have a huge impact on what shows up in your policy renewal. When labor and material expenses rise, insurance premiums typically follow. From June 2019 to June 2024, labor costs for construction trades jumped by around 40 percent, and building materials climbed by a similar amount, according to data from the U.S. Bureau of Labor Statistics. While prices for some items—like lumber—have eased a bit, inflation remains high for other key products.
Understanding the Rise in Texas Insurance Rates
According to a recent report by the Office of Public Insurance Counsel (OPIC), insurance rates for both homeowners and auto policies have been on the rise in Texas, and this trend may continue. Even if you haven’t filed any claims, a variety of factors contribute to higher premiums. Insurance companies must collect enough revenue to cover anticipated claims and operating costs, so as claims increase, so do rates.
Here are the main reasons for these higher premiums:
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Increases in the number and severity of storms and weather events
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Increases in the number of cars on the road and accidents
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Increases in the costs to repair new cars due to their advanced technology
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Increases in the costs of labor, materials, and other goods and services
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Increases in reinsurance costs
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Increases in litigation activity
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Increases in liability claim settlement expenses
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Increases in home values and building replacement values
Additional factors may apply to individual policyholders, such as:
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Past claims activity
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Past speeding tickets or moving violations
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A new or different vehicle or driver
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A change of address
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A change in the age of someone on a policy
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A change in the age of an insured home or vehicle
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A change in marital status
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A change in credit score
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A lapse in insurance
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A loss of previous insurance discounts
Who Oversees Consumer Protection for Insurance in Texas?
The OPIC is an independent Texas state agency that represents the interests of insurance consumers. It reviews insurance rate proposals, policy forms, and other regulatory matters to ensure that Texans receive fair and reasonable treatment from insurers.
What You Can Do to Save on Homeowners Insurance
One of the best ways to lower your homeowners insurance costs is by comparing rates. Insurers don’t all view your property the same way, so one company might offer a better price than another. In fact, a recent survey found that 21 percent of homeowners switched insurance carriers in the past five years, with 62 percent citing lower rates—or a spike in their old premium—as the main reason.
It’s also essential to get the right replacement cost for your home so you’ll be fully covered if it’s destroyed. A local, independent agent or broker— like the Thumann Insurance Agency in Dallas — can help by comparing quotes from multiple insurers, explaining how each calculates replacement cost, and recommending coverage add-ons to keep pace with inflation. And while you can start your search with online tools, keep in mind, though, that the local broker can help set up the coverage and possibly even get you a better rate or find additional discounts. Finally, checking resources like your state’s insurance department can also help you find rate comparisons tailored to your area.
Key sources for this article:
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National Association of Insurance Commissioners (NAIC)
https://content.naic.org/ -
Insurance Information Institute (III)
https://www.iii.org/ -
S&P Global Market Intelligence
https://www.spglobal.com/marketintelligence -
U.S. Census Bureau
https://www.census.gov/ -
U.S. Bureau of Labor Statistics
https://www.bls.gov/ -
Office of Public Insurance Counsel (OPIC)
https://www.opic.texas.gov/ -
Consumer Reports
https://www.consumerreports.org/
Disclaimer: This information is provided for general educational purposes only and is not intended to be construed as legal advice or as a complete description of available insurance products or coverages. Coverage terms, conditions, limitations, and exclusions vary by state and insurance provider. Not all products, coverages, or discounts mentioned are available in all states, including Texas. The examples and descriptions provided are for illustrative purposes only. For specific information about your insurance needs or questions about coverage, please contact The Thumann Agency directly.