Insurance now eats up 8.5% of housing costs: report

Extreme weather disasters, along with inflation, are elevating the cost of home insurance across the country, a new industry report found.

Home insurance makes up 8.5% of typical monthly housing costs for homeowners with a mortgage nationwide, which equates to $200 of an estimated total monthly housing cost of $2,354, according to LendingTree.

"Insurance used to be an afterthought in the homebuying process for most shoppers," said Rob Bhatt, LendingTree insurance analyst and licensed insurance agent. "In many areas today, the rising cost of home insurance is having an outsized influence over people's buying power."

Home insurance accounts for 10% or more of monthly housing costs in 20 states, led by Nebraska at 19.4%, Oklahoma at 17.6% and Texas at 14.4%. Weather risk is the primary factor, as homeowners in Nebraska, Oklahoma and Texas all face frequent hailstorms, thunderstorms and tornadoes that can lead to expensive insurance claims, according to the report.

Colorado homeowners pay the highest total premium at $463 per month, or $5,553 per year, as hailstorms and wildfires are common threats in the state. Nebraska and Texas homeowners pay the second and third highest premiums at $413 and $331 per month, respectively. 

"Nebraska, Oklahoma and Texas all have severe wind and hail risks, and Texas homeowners face additional threats from hurricanes and even wildfires, depending on their location," Bhatt said. "Insurance companies in these states have priced the potential costs of these types of disasters into their rates."

In many of the same states, insurance costs exceed or rival property taxes, which have surged 30% since 2019. The typical homeowner in Tennessee spends an estimated $284 per month on insurance, nearly double the state's estimated property tax bill of $143. Fourteen other states also spend more on insurance than property taxes, including Nebraska and Oklahoma, while homeowners in Virginia and Montana spend the same amount on each, according to the report.

Nationally, homeowners spend an estimated $311 on property taxes.

But weather risk alone does not automatically determine the cost of coverage, Bhatt said, as other states with severe weather risks have lower insurance rates. For example, Louisiana, Florida and California all rank outside the top 20 states in home insurance as a share of monthly housing costs.

Insurance makes up the smallest share of monthly housing costs in Hawaii at 2.1%, California at 3.8% and Northeastern states, like Vermont at 3.2%, LendingTree found.

"Insurance is generally regulated at the state level," Bhatt said. "It's important for leaders in each state to protect their residents with policies that help make or keep home insurance affordable."

While insurance costs are high, they may be stabilizing. Insurance rates rose 45.8% nationally from 2020 through 2025, compared with a 26.1% inflation rate, but increased just 6% last year after a 12.7% jump in 2024, according to a previous LendingTree report.