This article applies to California, where the problem is particularly bad, but it's evident in other states too.
Glenn and Lorraine Crawford paid about $500 a month to insure their home in Agoura Hills northwest of Los Angeles when they bought it in 2012.
The Crawfords say they have little alternative but to pay the bill that arrived last month, which, at more than $44,000 a year, is almost as much as their mortgage bill. The only other insurer willing to cover their home, Lloyd’s of London, quoted them $80,000 a year.
More than a year after infernos tore through Los Angeles County, millions of Californians like the Crawfords are suffering through a home-insurance crisis that has rolled on for years with eye-watering rate increases, canceled policies and rejected claims.
Two of the biggest insurers, State Farm and Allstate, aren’t selling to new customers in the state, despite getting double-digit rate increases approved for their existing policyholders. A third, Farmers Insurance, has committed to cover more homes in fire-prone areas, but only a fraction compared with the drop in its overall number of policies since the crisis began.
The insurance dysfunction has spread to California’s housing market, the country’s biggest and most expensive, with nearly one-in-five real-estate agents reporting a canceled sale last year because of clients unable to find affordable insurance, according to a survey by the trade body California Association of Realtors.
There's more at the link (may be paywalled).
Florida looks like another problem state for insurance.
Slake Counts has made a frightening decision. After the price of his homeowners insurance skyrocketed, the Tampa, Florida, resident has chosen not to renew his policy.
Now, he’s pondering his future, which may include selling his home and leaving the state.
“There may be other options for me at this time in my life that don’t necessitate me continuing to live in Florida or Tampa,” Counts told Tampa Bay 28 ... “I’m not the only one in this boat.”
He might be right. According to Bankrate, Florida is the third-most expensive state for homeowners insurance in the U.S. Premiums in the Sunshine State average out to $5,828 per year ($486 per month) for a $300,000 home, while the national average is $2,424 ($202 per month), as of November. Counts showed Tampa Bay 28 the amount of his 2026 renewal increased to $14,523.
Factors that have made home insurance increasingly unaffordable for many Americans include higher home prices, the cost of building materials and the impacts of climate change — especially in disaster-prone areas like Florida.
It’s no wonder that some insurers are pulling out of certain states, and why some consumers are taking the risk of forgoing coverage. But experts emphasize the risks to those who “go bare” can outweigh the benefits.
Again, more at the link.
Those are scary, scary numbers. We bought our home in north Texas ten years ago, paying a relatively low price for a modest 3-bedroom home, and putting down a 20% deposit to keep mortgage payments affordable. Even so, a quick check reveals we're now paying as much per month to insure our home as we are on the mortgage. The premium has increased fairly sharply over the past two to three years, and seems likely to go up by more than 10% this year - perhaps double that, thanks to weather-related disasters and losses elsewhere in the state.
Most of us can't claim our insurance costs against taxes, and that's part of the problem. When a big conglomerate such as Blackrock buys up thousands of houses to rent them out, it can claim their insurance premiums as a business expense against its taxes, making them that much more affordable. On top of that, it can increase its rental charges to cover what it actually pays. Given the very large discounts such a company can squeeze out of an insurance company that wants its business - an insurance company that it may partially or wholly own, at that - it may be paying only a small percentage of the retail or consumer cost of insuring its houses. Is it any wonder that so many consumers find that rental costs in some areas are actually less than the cost to buy a home?
How have you found your home insurance costs and premiums lately, dear readers? Please let us know in Comments.
Peter
32 comments:
Our insurance bill has doubled over the last 6 years. Who do they think they are, a grocery store?
The problem of course is that with a mortgage you have to carry insurance. One of the points you make about insurance being a business expense also argues against it being treated the same way in the health market for employers. Insurance should not be part of the tax code, period, as with everything else government involvement makes things more expensive.
Not nearly that steep. I bought a condo in Houston, and the total mortgage payment is about $1200 a month, and about $300 of that goes to escrow, which includes the insurance payments.
My wife and I built a very modest (inexpensive) home in 1995, self contracting it and paying approximately $45,000 for building and not having a mortgage to pay off. If I recall, standard home insurance was approximately $950 a YEAR. Bundling our vehicle insurance with same company (Allstate) may have some influence with the price. Home is located in old neighborhood, and some homes around us have been taken down and replaced with newer home.
We are about to pay our 2026 on same home, paying $2200 for same policy. We have never made a single claim in over 30 years, and exterior improvements was re-roofing the house after 26 years (standard house shingles).
Apartment growth in our area is VERY aggressive. Property cost to purchase is expensive and as article above suggests, very difficult for the young to even contemplate purchasing home of their own. Mobile home with renting lot or apartment are the options, unless living with parents is also on the table.
This is one of those cases where I can't blame the insurance companies. People have built homes in areas where a disaster is a matter of when, not if, and have allowed the government to turn them into little better than death traps with the negligence in their prevention programs (brush clearing, infrastructure maintenance, keeping the water full for fire fighting). It's worse in Cali, but most states have similar insurance regulations and poor infrastructure.
California's problems were known more than a year ago before the Palisades fire - see https://hotair.com/john-s-2/2025/01/08/californias-insurance-industry-was-already-struggling-will-the-palisades-fire-break-it-n3798622 . Thanks to the way california politicians have screwed up their insurance market all insurance companies were looking to leave unless they could pass on reinsurance costs. Then that fire made everything worse. So much so that the And the fact that the Palisades rebuild efforts are stuck in permit hell means that a) they are gaping cash drain for the insurance companies and b) reinsurance costs for policies anywhere similar are now through the roof and the insurance companies are passing this on.
PS this post may seem familiar - https://bayourenaissanceman.blogspot.com/2025/01/bureaucrats-and-insurance-marriage-made.html
1/2025 homeowners coverage increased 60 percent so I dropped to house coverage with no contents to just get it down to a 10 percent increase. On 1/2026 it increased 20 percent again. Will probably just drop it next year.
USAA still offers reasonable rates if you qualify for that insurance. The others spread the risk across the nation rather than examining YOUR risk of loss.
Here in SE Wisconsin, a $240K condo homeowner's policy is about $200/month. That number is almost identical to same policy on a $200K single-fam 3-BR which we had until 5 years ago.
Last June I paid our homeowners on a 1k foot 3 bedroom home with attached garage in a small town in Michigan. Less than $ 700. At about the same time, I insured a Florida trailer. Its 31 feet, on blocks and tied down, with a nice florida room attached. it was almost $1600. Our 27” trailer in Michigan was about $200. I didnt extensively shop for the Florida insurance because it was a sudden purchase and I needed the insurance quick.
My homeowner's policy increased my.mortgage by $900 a month in the past year. Florida.
Please follow me through on this one and tell me where I veer off the road:
Blackrock is purchasing homes to rent.
Blackrock owns at least one home insurance company.
Blackrock's home insurance company raises rates to uncomfortable levels; other insurance companies, seeing the profit, do the same.
Homeowners, who are unable to now meet the twin rising costs of home insurance rates and property taxes, find they have to sell.
Blackrock now has more homes they can purchase to rent.
Home insurance in California is because of California government officials corruption.
There isn't a climate change problem or an inflation problem. It is solely on the shoulders of the corrupt officials.
Dave
About 300 dollars a year for home owners insurance on a 52,000 dollar 1,100 sqft house in 1998 in SC. Same house today about 1400 a year current value under 200000. Had trouble getting insurance at reasonable rates when geico started raising rates a couple years ago and then they dropped me. Just happened that state farm started accepting new home insurance again and got it covered under them with no lapse for the same 1200 i had been paying before hikes. Now state farm even with new roof just put on raised it 200 to 300 dollars. 20-30% increase this year. Strangely auto insurance didn't go up this year.
We haven't paid homowners insurance since we paid off our last mortgage 20 years ago. Since then, we've built outside of weather hazard areas. We have ample dfensible spoace and our own firefighting equipment. If something breaks, we fix it, we don't file an insurance claim. With what we've saved on insurance premiums over the years, we could rebuild ourselves and still have savings left over. Same with our vehicles. Buy used, pay cash, carry the minimum insurance required by law, invest the insurance cost savings. Our annual car insurance is currently $300/year for two trucks (no accidents or tickets). It's not for evryone, but it's worked out great for us.
In rural Oregon (where Dems aren't terribly welcome), wildfire risk has shaped a lot of the insurance issues. There isn't any mitigation for those in "moderate" risk vs "high" risk, though people in "extreme" risk found their policies cancelled.
We're moderate risk. In 2022, our manufactured home policy was $1400 a year. In 2023, $2400 a year. The last major fire was in 2021, but never got close (its origin was 10 miles north of us, and it went east.) No mercy from them.
For 2024, the insurance company got creative. Borrowing from George Orwell, Country Financial Insurance sent a letter pointing out their New! Improved! Cheaper! policy guidelines. 6 pages into the 12 page document, they casually mentioned that unless the manufactured home was mounted on a continuous poured foundation (the vast majority are on a concrete block one. Those don't count), the Improved policy would cover contents of the house, but not the building itself.
We went to a local agent, and found a policy from American Modern. They cover manufactured houses, fully. This year's cost is $1750, and went up 6% from last year. (A good sized fire had something to do with it.) FWIW, Farmer's Foremost does manufactured houses too, but not in wildfire country).
As a BFYTW, we changed our auto policy from Country. Saved 10%. The Country agent had a case of the sads.
RCPete
The California insurance problem has been building a lot longer than generally acknowledged. Over 20 years ago, our then insurer exited the California home insurance market. The added costs and restrictions with the new insurer were merely a foretaste of today. Happily, we also exited the California market shortly thereafter
Your second line, BlackRock doesn't purchase home to rent. They do have some large apartment complexes in their portfolio but they do not deal with single family homes.
BlackSTONE owns about 62,000 single family homes through two subsidiaries. They are the third largest single family homeowner behind Invitation Homes (~97k) and Progress Residential (~100k) and not much above the next three American Homes 4 Rent (~60k), The Amherst Group (~59k) and FirstKey Homes (~52k).
The top six firms own roughly 430k single family homes, this is out of around 82 to 85 million in the United States, or about 0.5% of the market. Blackstone is about 0.007% of the market. Large firms (owning 1k+) account for roughly 3% of the single-family home market. 42% of all single-family home landlords own one while 33% own between 2 and 4.
Also, this is only single-family homes, multi-family homes; duplexes, triplexes, and quadplexes (5+ are considered commercial real estate). There are roughly 23 million multi-family housing units in the US. Ownership breakdown on these roughly 70% single owner (like me), 25% small LLCs & Partnerships (I know a couple families where together they (brothers & sisters) own one or more properties), 5% being companies though less then 2% own more then 1k.
Corporate ownership is also not evenly distributed, the three highest concentrations of corporate housing ownership are Atlanta, Phoenix, and Charlotte where they own between 15 and 25% of the market. Outside those areas all the corporate owners together do not have a large enough percentage of the market to dictate rates nor control insurance prices.
In areas where they exist military bases have a larger effect on the rental market as most G.I.’s would prefer living off base and when allowed to they have what is called BAQ or Basic Allowance for Quarters which is totally separate from their Base Pay, but still based on their pay grade. This is often higher then what someone making the equivalent to a G.I.’s base pay could afford to spend on rent and thus, except in a few exceptional areas (like Long Beach), increase the rental prices in the area.
I pay $2240 annually. Here in Texas, recent changes to most policies include a 2% deductible for hail and wind damage. The 2% deductible is based on the insured value of your home, not the claim cost. Calculating 2% of a $375,000 insured value amount comes out to $7,500 out of pocket.
https://www.insurancefortexans.com/blog/the-2-deductible-dilemma-what-texas-homeowners-need-to-know
In thirty years our house insurance went from $500/yr to $8k/year. I dropped it after the mortgage was paid-off last year. I had to look around hard to just find a liability policy. It's tough out there.
USAA often doesn't pay out. Search twitter/x for many horror stories.
Green beret/marine/gun guy industry rep Clay Martin's house burning down being one instance.
Same math applies to property taxes. Blackrock buys at elevated prices, everyone in the neighborhoods tax bills go up due to new comps, and Blackrock also won't sell for a loss or abandon to foreclosure when Financials go upside down.
Private equity is destructive in so many ways, and that's before we ever get to what they're games are doing to bond/debt markets.
If you have a mortgage, they dictate minimum insured value. Have had to raise ours about every other year.
I've been paying for insurance for 45yrs & have never filed a claim but it still goes up every few years.
We still have our USAA insurance but I am starting to hear horror stories- which is upsetting for obvious reasons but also because they’ve been so great in the past.
I'm no friend of insurance companies, but unless you own your home outright, and are independently financially able to re-build, should the worst happen, you do need homeowners insurance.
So let's consider what's involved in your home insurance premium. Insurance is a competitive industry, so I assume that premium charges are not lightly nor arbitrarily set.
General location, history of natural disasters, as well as individual claim history are vital data, as are location-determined general construction and other costs where you live.
Remember also that your insurance company is calculating premiums on estimated FUTURE costs, including expected inflation and increases in labor, materials, equipment, taxes, transport, and all the other "inputs" that are priced into construction.
I found this regarding inflation over just the last 10 years. Now apply this information to each and every housing construction input:
AI Overview
Between 2016 and 2026, the cumulative inflation rate in the U.S. is approximately 35.05%. An item that cost $100 in 2016 would cost roughly $135.05 by early 2026, driven by an average inflation rate of 3.05% per year. This represents a significant decrease in purchasing power over the 10-year period.
Key details regarding the 2016-2026 inflation period:
Total Cumulative Increase: ~35.05%.
Average Annual Rate: 3.05%.
Price Adjustment: Prices in 2026 are approximately 1.35 times higher than in 2016.
Alternative Metrics: Core inflation (excluding food and energy) was slightly lower, with a total increase of 33.45%.
Annual Data Trends: Annual rates saw significant fluctuation, starting at 1.26% in 2016 and experiencing spikes in 2021-2023, before settling to 2.4% for the 12 months ending February 2026.
My usaa premium is $800 month for a 350k house. Mtg payment is $513. I am looking at other options. .
We have ha USAA for years. Premium keeps creeping up, now $620/ mo. Never had a problem with USAA paying for damages, particularly all we got from Ivan, and more recently with an ordinary big storm damage to the roof requiring new shingles and two new panels. Completely covered damages, repairs and staying in a motel from an indoor plumbing leak while we were away that covered almost the entire house. Nothing but praise for USAA from us.
Mine is relatively stable at $2400/yr, from the $1700/yr when I bought 10 years ago. No bets on next year though...
Insurance is legalized gambling. The Insurance company bets that there will not be a problem, you bet that there will be a problem.
But when the state insurance officials don't allow the insurance company to evaluate the risk at a local level, they have to do so across a much larger level. This includes houses built in very fire-prone or riot prone areas. The state governments and also keep finding new things that the insurance is responsible for (as well as driving up the cost of construction, and therefor the replacement costs of the houses)
California has been so anti-business, and anti-insurance companies for many years that it's not at all surprising that major companies have opted out of complying with the crazy rules.
In 2008, my neighborhood experienced a severe hail storm (our neighbor, Windsor, got the twister) that damaged roof shingles beyond simple repair. Full replacement was necessary.
https://www.cbsnews.com/pictures/northern-colorado-twister/2/
I'd been a USAA insurance customer for multiple decades, first through my USAF spouse, and I continued with USAA post-divorce.
USAA denied my 2008 roof claim, while neighbors with policies with other major insurance providers had no claim denied.
I decided that that was bull$hit, and immediately shopped around, and have been with Allstate since, quite happy with my policy, premium, claim response, and my local agent is a winner.
Shop around if you're unhappy, people -- it's a PITA, but apathy and inertia may be costing you big bucks.
I hope you have better luck with Allstate than I did. Hail damage three years ago totaled $17,000. Allstate paid $7000, and it took a lot of verbal arm twisting to get that. I switched all of my insurance to Texas Farm Bureau.
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