Homeowners with a fixed rate mortgage are supposed to be immune to this. The rate is locked, the principal and interest never move, and the whole point of the thirty year loan is that the payment is a known quantity for three decades. Then the escrow statement arrives and the payment is higher anyway. The rate did not change. The insurance did.
What Happened to Premiums
The average annual homeowners policy in the United States ran $1,952 last year, up 8.5%. That was the good year. The increase between 2023 and 2024 was 18%, and the year before that was 12%.
Stretch the view back further and premiums rose 24% between 2021 and 2024, outpacing general inflation by eleven percentage points over the same stretch. Nothing about the house changed. The cost of insuring it did.
Why Insurers Keep Raising
Three things are driving it and none of them are going away quickly. Rebuilding costs went up with construction labor and materials, so the amount an insurer would owe on a total loss is higher than it was. Reinsurance, which is the insurance that insurers buy for themselves, repriced sharply after several heavy catastrophe years. And weather losses have been concentrated in ways that push whole state markets rather than individual policies.
Homeowners have noticed. In one recent survey, 82% expected another increase this year, and roughly half said insurance costs weigh heavily on their decisions about where to live.
The Part You Can Actually Control
Here is what makes this different from a mortgage rate. You cannot renegotiate the bond market. You can absolutely renegotiate a policy, and most people never do.
About 19% of homeowners say they plan to switch carriers this year, which means four out of five will renew whatever they have without a single phone call. Insurers price renewals on the assumption that most customers stay, and that assumption is usually correct.
The three levers that move the number are the carrier, the deductible, and the bundling. Raising a deductible from $1,000 to $2,500 typically cuts the premium meaningfully, and if you have an emergency fund that covers the difference, you are effectively self-insuring a risk you were paying someone else to carry.
Final Take
Pull out the declarations page and look at two things. First, the dwelling coverage amount, because if it has been escalating automatically each year it may now be higher than what rebuilding would actually cost. Second, the premium compared to two years ago.
Then get three quotes. Not one, three, and from carriers you have not used. The spread between the cheapest and most expensive quote on identical coverage is routinely several hundred dollars a year, and that gap has widened as carriers pulled back from some markets and leaned into others.
The mortgage payment is fixed. The escrow is not, and the escrow is the part still in play.
Written by Deniss Slinkins
Millionaire Core
