10
Loading video...
By Giulia Carbonaro
Senior Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Home insurance prices are climbing more rapidly in the United States than in most developed countries, with a new study finding that they rose four times as fast as the median across 27 OECD (Organisation for Economic Co-operation and Development) countries between 2024 and 2025.
Premiums across the nation were up 8.2 percent year-over-year, according to data compiled by Insuranceopedia, against a median increase of just 2.1 percent across Austria, Belgium, Canada, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Sweden, Switzerland, Turkey and the United Kingdom.
The United States was not alone in seeing home insurance costs climb. Twenty-two of the 27 countries reported premium increases between 2024 and 2025, showing that higher inflation, surging repair and construction costs, and global warming—which is making natural disasters more frequent and more severe—are bringing up the cost of coverage almost worldwide.
Read More on News
But most countries saw far smaller increases than the United States. Nationwide increases ranged from 0.6 percent in the Netherlands to 13.7 percent in Turkey. The United States reported the fourth-biggest increase of the 27 countries, following Turkey, France (12.6 percent) and Norway (11.7 percent).
By contrast, home insurance prices fell in five countries: Denmark, Estonia, Germany, Italy and the United Kingdom. Declines ranged from 0.1 percent to 15.9 percent over the same period. In Canada, they were essentially flat, rising by a modest 0.2 percent.
Notably, the numbers show only where home insurance premiums rose the most between 2024 and 2025, but not where covering a home costs the biggest share of a household’s income. Figures are based on nominal price changes, not inflation-adjusted measures of the actual cost of insurance.
Related Story
Homebuyers Get Two Major Mortgage Boosts
“American homes sit in the path of far more of the weather that costs money—hurricanes, wildfires and the hail and windstorms through the middle of the country,” Max Coupland, co-founder and CEO of Insuranceopedia, told Newsweek.
“Losses outgrew what the industry was charging, and insurers have spent years catching up. U.S. policies also pay to rebuild at today’s prices, so construction inflation lands on everyone’s renewal, not just the people who claimed. What gets missed is that many European markets push catastrophe risk into state-backed pools, which spreads a bad year around. The U.S. leaves it with private insurers, and it shows up on the bill.”
...
Why Have U.S. Home Insurance Premiums Risen So Sharply?
Home insurance premiums have jumped 24 percent for the typical U.S. homeowner in just three years, a recent NerdWallet study found. These increases have happened for multiple reasons, Carolyn Kousky, founder and executive director of Insurance for Good, told Newsweek.
“A key one is the dramatic increase in construction costs, which have gone up much more than general inflation," she said. "Construction costs are a driver of property insurance. As the cost to rebuild goes up, that means higher claim payments, and, in turn, insurers seek higher premiums to cover those costs.”
Construction costs rose more than 40 percent between 2019 and 2024, with double-digit annual jumps the country had not experienced since the early 1980s, added Kousky, who is also associate vice president for economics and policy at the Environmental Defense Fund and a senior fellow at the University of Pennsylvania’s Kleinman Center for Energy Policy.
Premiums have tracked those rebuilding costs much more closely than general inflation, pushing home insurance premiums up, especially in vulnerable states like Florida and Louisiana.
“When labor and materials get more expensive, every claim gets more expensive, and premiums have to follow," Kousky said. "This can sometimes take years from when costs go up in the real economy to when they are seen in the insurance market. In places like Florida, Louisiana, and northern California, premiums have outpaced construction costs. That’s where you’re seeing climate risk show up: more frequent and more severe disasters hitting a building stock that wasn’t built for today’s climate.”
The latest data on the cost of home insurance, she said, might not even show us the full picture of what is happening right now, with the home construction workforce having taken a hit from the Trump administration’s immigration crackdown and mass deportations.
“Insurance prices lag macroeconomic changes,” she said. “Renewal cycles and rate approvals take time, so the construction cost spike of 2020 to 2022 is still working its way into bills today. Tariffs and labor shortages could keep that pressure on.”
Private carriers in the United States are also facing a bigger risk than they were in previous decades, and they are passing on the extra cost to policyholders.
“Generally speaking, industry underwriting losses–claims paid greater than premium revenues earned–have necessitated a rise in premiums to make up for those losses,” Margaret Walls, an environmental economist and a Senior Fellow at Resources for the Future, told Newsweek.
“The reasons why claims have been rising are twofold: increases in property damages from extreme weather events and rising construction costs. Damages have been increasing because of an increase in the frequency and severity of extreme events and also because of more risk exposure—as in more people and assets in risky areas.”
It is not just more hurricanes and wildfires, Walls said, but also losses from severe convective storms, which have accounted for the biggest losses for the industry in recent years.
...
What Are Rapidly Rising Costs Doing to Housing Affordability And Insurability?
American households, already facing a housing crisis, are feeling the impact of higher home insurance premiums. A Pew Research Center poll released in May found that 71 percent of homeowners said the cost of coverage has gone up over the last few years, including 42 percent who said it has gone up a lot.
Higher premiums are chipping away at household budgets, so much that in many states home insurance now costs more than property taxes. This affordability challenge has a ripple effect on homeowners and the way they decide to protect their homes, Walls said.
“When premiums go up, homeowners often change their policies to increase deductibles and reduce coverage; this means they will have to pay more out-of-pocket when they experience a loss,” she said. “Insurers are also doing things like having separate hurricane or wildfire deductibles, which adds to that out-of-pocket problem.”
It shows some optimism on the part of Americans. They are deciding to save some money now and bet against a potential future natural disaster that could wipe away those savings, and then some.
In some of the most vulnerable parts of the country, nonrenewals are “adding a lot of stress to households, thinking about whether they are going to have coverage next year or will have to scramble to find a new policy,” Walls said. “Insurance is just a one-year contract; it used to be something people didn’t have to think a lot about but now they do.
“In high wildfire risk locations, finding insurance is an integral part of the home purchase process now, because you have to have insurance to get a mortgage. Sometimes people just try to get whatever policy they can find, and it isn’t always the best one.”
There is concern that these issues might ripple through the financial system and greater economy, though the impact is still being studied.
“At the extreme end, studies have found that there is a link between insurance problems and mortgage delinquencies, prepayments, and foreclosures,” Walls said.
Will the U.S. Continue Outpacing Most OECD Countries?
Coupland said he expects the gap between the United States and the OECD countries to narrow in the future.
“Reinsurance has got cheaper, and premium growth has already slowed to around 4 percent this year from 12 percent last,” he said. “But the exposure isn’t changing.”
Friedlander is mildly optimistic about prices not surging again like they have in recent years in states like Florida and Louisiana, saying that “global reinsurance costs have stabilized and are a positive factor for generating rate moderation across many markets.”
But “while premium growth appears to have peaked and is now trending down, there remain other challenging cost drivers at bay, including natural catastrophe risks and notable growth in residential roof contractors and associated insurance fraud, as well as an escalation of legal system abuse in many states,” he said.
Kousky said: “If we want to address insurance affordability, we can’t look at insurance in isolation. It’s tied to housing costs, construction markets, trade policy and how well we’re preparing our homes for extreme weather.”
Contact Newsweek editors on this story: Tobias Meyjes and Dave Siminoff.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines