- - Insurance costs are rising faster than inflation, leaving families stretched thin — here’s what’s driving the surge and how states plan to respond

Will KentonNovember 4, 2025 at 9:15 PM

0

Aerial view of flooded homes and cars in a neighborhood after Hurricane Debby.

Across the United States, the cost of insuring a home or car has surged well beyond the pace of inflation — and for many households, the numbers are becoming impossible to ignore.

Over the past six years, homeowners’ insurance premiums have climbed more than 40% nationwide, according to industry data. In 2024 alone, average rates jumped 10.4%, with 33 states reporting double-digit increases. (1)

Must Read -

Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how

I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around

In Utah, rates have soared nearly 60% in just three years, while auto insurance rates have risen 56% since 2020, according to the U.S. Bureau of Labor Statistics (BLS) By comparison, overall inflation during that period has been just over 20%. (2)

And Jarrad McCarthy, a Kansas homeowner, saw his homeowners insurance premium jump from about $1,300 to nearly $1,900 in only two years — a staggering 47% increase. “I didn’t file any claims, I didn’t add coverage — it just went up,” he told The Wall Street Journal. (3)

Here’s what’s driving those premium increases, what states are considering to bring them under control, and what consumers can do to keep their own costs in check.

What’s behind the premium increases?

A mix of environmental, economic, and structural factors has driven insurance costs sharply higher.

The cost of covering homes has soared as natural disasters become more frequent and severe, forcing insurers to pay out billions more in claims than in past decades. (4, 5) Climate-related events such as wildfires, hurricanes, and floods have made some regions almost uninsurable.

At the same time, construction materials, auto parts, and labor costs have surged, raising the price of repairs and replacements after every claim. Many insurers are also struggling with years of underwriting losses when they have paid out more in claims than they collect in premiums. To satisfy shareholders and shore up their bottom lines, they have had to raise rates or reduce coverage.

Reinsurance, the backup insurance companies buy to manage risk, has also become more expensive, further inflating costs. (6) Together, these pressures have disrupted the normal balance between risk and price, leaving homeowners and drivers facing steep increases that no longer seem tied to their own claim history or driving record.

Read more: 22 US states are now in a recession or close to it — protect your savings with these 5 essential money moves ASAP

What are states and lawmakers doing about it?

Several states are beginning to explore ways to slow the steep rise in insurance premiums by introducing oversight or limits on rate hikes. In Texas, lawmakers have proposed requiring insurers to seek approval for any increases greater than 10% in an attempt to give regulators more power to prevent sudden or excessive jumps in homeowners’ costs. (7) California has long been seen as a model for stricter regulation through Proposition 103, a 1988 law that requires prior approval for rate changes and allows public input before they take effect. (8)

Supporters of price caps argue that measures like these create a ceiling on rate hikes, helping households better plan for insurance costs and forcing insurers to find efficiencies rather than automatically passing on higher expenses.

While price caps could help slow premium increases, they carry risks that could backfire on consumers. If rates are held too low, insurers might leave high-risk areas or slash coverage, reducing competition and choice. This is already happening, for example, in California where State Farm decided to non-renew home insurance for 30,000 customers and stopped writing new policies entirely. (9)

Caps distort the link between risk and cost, encouraging underinsurance or poor risk management. To stay solvent, insurers may raise deductibles, add exclusions, or rely on taxpayer-backed programs to cover losses. Critics warn that while caps sound appealing, they could ultimately shrink coverage options and weaken the insurance market’s stability.

What can consumers do?

Even if price caps take hold, consumers shouldn’t wait for policy changes to save money. Here are a few ways to manage your insurance costs now: Shop around each year. You don’t have to auto-renew. Compare multiple quotes — rates can vary widely between insurers for identical coverage.

Bundling your policies. Combine home and auto insurance for potential discounts. often earns discounts, as does maintaining a good driving record or installing safety features such as storm-resistant roofs or anti-theft devices.

Upgrade for savings. Installing storm-resistant roofs, home security systems, or anti-theft devices can earn safety discounts.

Adjust your deductible wisely. Raising it can lower your premium, but make sure you have enough in an emergency fund to cover the higher out-of-pocket cost. Track your insurer’s financial health. Especially in states with major storms or wildfires, monitor whether your insurer is pulling out or changing terms.

Finally, budget for increases. With climate and construction costs unlikely to drop soon, building a small “insurance buffer” into your household budget can help cushion any potential further increases.

For now, the best defense is vigilance: understand what’s driving your premiums, stay flexible with your coverage, and make sure you’re getting the best deal you can — before your next renewal notice delivers another unwelcome surprise.

What To Read Next -

Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP

Are you richer than you think? 5 clear signs you’re punching way above the average American’s wealth

Warren Buffett used 8 simple money rules to turn $9,800 into a stunning $150B — start using them today to get rich (and then stay rich)

An alarming 97% of older Americans are carrying debt into retirement — here’s why and 4 simple things you can do if you’re stuck in the same situation

Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Consumer Fed (1); U.S. News (2); WSJ (3); Hutins (4); UNDRR (5); U.S. Treasury (6); Texas Tribune (7); California Department of Insurance (8); Insurance Journal (9)

This article originally appeared on Moneywise.com under the title: Runaway insurance costs are stretching family budgets thin — here’s what’s driving the surge and how states plan to act

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Original Article on Source

Source: “AOL Money”