How to Navigate Rising Homeowners Insurance Costs

Understanding the Rising Costs of Homeowners Insurance

According to LendingTree, home insurance rates have risen 37.8% since 2019. While rising home prices have played a big role, inflation and its effect on building materials have also contributed. Changes in the insurance industry have created additional challenges for homeowners, with some companies adjusting coverage in high-risk areas prone to natural disasters, raising premiums, or exiting those markets altogether. As rates rise across the country, the impact extends beyond individual homeowners to the construction and real estate industries, landlords, renters, and affordable housing markets.

The Financial Impact on Homeowners

According to Bankrate, the average cost of homeowners insurance in the U.S. is $2,258 per year for $300,000 in dwelling coverage, though this can vary depending on several factors. For many homeowners, retaining insurance is a mortgage requirement, making rising costs a critical financial concern. In high-risk areas, homeowners may be faced with difficult choices: paying increasingly high premiums, seeking alternative coverage options, or going uninsured—risking foreclosure or financial instability if disaster strikes. Additionally, homeowners in areas with limited insurance availability may see their property values go down, affecting resale potential. In California, for example, a nonrenewal notice from an insurer can immediately reduce a home’s value by 12% to 39%.

How a Wealth Advisor Can Help

A wealth advisor can play a crucial role in helping you manage the rising costs of homeowners insurance while protecting your overall financial well-being. Here are some steps your advisor can take:

1. Review Your Current Insurance Policy and Costs

• Assess your existing coverage to ensure it aligns with your needs and financial situation.
• Identify potential gaps in coverage and explore whether additional riders or endorsements are necessary.
• Compare premium costs and coverage options with other providers to find more cost-effective solutions.

2. Explore Alternative Coverage Options

• Help you research state-backed insurance programs or specialized insurers if traditional companies have exited your area.
• Assess umbrella policies and supplemental coverage to mitigate risks not covered by standard policies.

3. Adjust Your Budget to Accommodate Rising Costs

• Identify areas in your budget where expenses can be adjusted to accommodate higher insurance premiums.
• Create a dedicated savings plan for insurance-related expenses to lessen the financial burden of premium hikes.

4. Optimize Your Home’s Risk Profile

• Suggest home improvements that could lower insurance costs, such as adding storm shutters, upgrading roofing, or installing security systems.
• Evaluate the potential benefits of increasing deductibles to lower monthly premiums while ensuring you have the savings to cover potential claims.
• Determine whether you could benefit from a specialized policy for high-value personal property, offering broader coverage than standard homeowners insurance.

5. Plan for the Long-Term Impact on Homeownership and Real Estate Goals

• Analyze how rising insurance costs affect your overall homeownership strategy, including buying, selling, or refinancing.
• Provide guidance on relocating to areas with more stable insurance markets if necessary.
• Assess the impact on investment properties and rental properties to ensure profitability.

Be Proactive in Protecting Your Financial Future

At Focus Partners Wealth, our financial professionals are here to help you navigate these challenges with confidence. By taking a proactive approach, we can help you manage rising insurance costs, protect your assets, and ensure that your financial plan remains strong in the face of industry changes.

If you're concerned about how rising insurance costs may impact your financial future, reach out to our team today to discuss your options and develop a plan tailored to your needs.

If you are not working with an advisor or would like a second opinion, we would be happy to help. We encourage you to schedule a phone call or virtual meeting with our Client Development team.

Sources:

LendingTree. “State of Home Insurance in 2024: Rates Up 37.8% Cumulatively Since 2019,” May 28, 2024.

Bankrate. “Average homeowners insurance cost in February 2025,” Feb. 10, 2025.

Insure Our Future and The First Street Foundation’s fall 2023 insurance issue.

Services are offered through Focus Partners Advisor Solutions, LLC (“Advisor Solutions”) and Focus Partners Wealth, LLC (collectively referred to in this document as “Focus Partners”), SEC registered investment advisers. Registration with the SEC does not imply a certain level of skill or training and does not imply that the SEC has endorsed or approved the qualifications of the RIAs or their representatives. Prior to January 2025, Advisor Solutions was named Buckingham Strategic Partners, LLC, and Focus Partners Wealth was named The Colony Group, LLC.

This is for informational purposes only. The information provided does not purport to present a complete picture, but Focus Partners believes the information is representative of issues and needs facing some clients and why they may seek this service. Nor should it be construed as, specific investment, tax, or legal advice. Individuals should seek advice from their wealth advisor or other advisors before undertaking actions in response to the matters discussed. No client or prospective should assume the above information serves as the receipt of, or substitute for, personalized individual advice. This article includes information from third party sources. Focus Partners considers these sources to be reliable; however, it cannot guarantee the accuracy or completeness of the information received.

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