First American: Homeowners Insurance Skyrocketing, Especially in the South

Homeowners insurance costs are skyrocketing, especially in disaster-prone markets in the South, a report from First American shows.

This is a challenging affordability problem for both new and existing homeowners.

Homeowners insurance premiums in the U.S. increased by 21% between 2021 and 2023, driven by severe weather-related events, rising construction costs, and higher claim payouts, according to the report.

“Between 2021 and 2023, U.S. homeowners’ insurance premiums jumped 21 percent — adding roughly $300 per policy each year — outpacing income growth and inflation while undermining the financial stability that homeownership provides,” says Sam Williamson, senior economist for First American, in the report. “For prospective home buyers already grappling with affordability constraints from rising home prices and elevated interest rates, this additional expense further chokes their budgets and erodes their house-buying power.”

The South, particularly coastal cities, faced the steepest hikes, with eight of the 10 metros with the fastest-growing premiums located in the region.

“Areas in the South prone to severe weather have borne the steepest increase in home insurance premiums,” Williamson says. “Among the nation’s 50 largest metro areas, eight of the 10 recording the most dramatic premium increases are in the South.”

“In 2023, homeowners in this region shelled out an average of $2,120, significantly higher than the $1,575 paid elsewhere,” he says. “Coastal cities, where tropical storms and hurricanes loom large, have seen the sharpest increases. New Orleans tops the list, with a 51 percent increase in premiums from 2021 to 2023, translating into an extra cost of about $1,200 and pushing average annual premiums to more than $3,500.”

Photo: Bette Jane Camp