Homeowners insurance premiums are taking a larger bite out of household incomes – and the increases are outpacing inflation.
Nationwide, the percentage of household income spent on homeowners insurance premiums nearly doubled between the early 2000s and 2022 – jumping from 1.2% to 2.1%. That’s according to recent analysis by the Insurance Research Council, an industry-supported nonprofit. Their projections suggest it could already be at 2.4%.
“The trend is that affordability has been deteriorating,” said Dale Porfilio, the council’s president. “It's a countrywide trend: it's not just in the last couple of years, it's been going on for 20 years.”
The picture in the West is varied. Utahns are spending just 1% of their income on insurance – the lowest figure in the country – while Wyoming, Montana, New Mexico and Colorado are all above the U.S. average of 2.1%. One of the key factors behind the trend in the West is the growing threat of wildfire.
“The industry has been struggling with how to … price for the wildfire risk, which we definitely see increasing again related to climate risk,” Porfilio said.
He advocated for efforts to improve home and community wildfire resilience, which he said could help improve the affordability and accessibility issue.
“It is important that everybody be involved in helping reduce the risk,” he said. “We can't go and change the climate overnight. So how can we make the homes, businesses and communities more resilient when Mother Nature is going to rear its head?”
He also said that state insurance regulators need to “allow insurance companies to price as they think is appropriate.”
He acknowledged that isn’t a “fun answer,” and could result in higher premiums for some.
“But if the price isn't adequate, then companies are going to pull back,” he said. “And that's not a good outcome either.”
The Mountain West News Bureau reported in May that rising premiums and policy cancellations are hitting communities across the West. Colorado, Montana, New Mexico and Wyoming all have multiple counties where nonrenewal rates at least tripled between 2018 and 2023.
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, KUNC in Colorado and KANW in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.
