The September 2025 ICE Mortgage Monitor Report shows homeowners insurance premiums continuing to soar. They've increased 11.3% year-over-year.
That rise is a little slower than the one during the first six months of 2024, but it is still a historically high rate of increase, says ICE.
"The average annual property insurance payment for single-family mortgage holders has climbed to nearly $2,370 per year, accounting for 9.6% of average monthly mortgage-related expenses when factoring in principal, interest, taxes and insurance (PITI)," according to the report. "This marks the highest share on record and underscores the disproportionate role insurance costs are playing in rising homeownership expenses."
So, compared with those other PITI elements, homeowners insurance premiums have grown much more quickly. Over the last five years, they've increased by 70%, while principal (repaying the amount borrowed) has risen by 23%, interest by 27%, and property taxes also by 27%.
What Homeowners Insurance (aka Hazard Insurance) Does and Doesn't Cover
According to the Insurance Information Institute (III, an industry body), "Standard homeowners policies do not cover flooding, earthquakes or poor maintenance. Flood coverage is provided by the federal government’s National Flood Insurance Program, although it is purchased from an insurance agent. Earthquake coverage is available either in the form of an endorsement or as a separate policy. Most maintenance-related problems are the homeowners’ responsibility."
The III provides a list of standard cover (click the above link for fuller details), which includes the following four areas:
- Structure of the home: Most standard policies also cover structures that are not attached to a house such as a garage, tool shed or gazebo.
- Personal belongings: These are typically covered for insured risks up to 50% to 70% of the amount of insurance on the structure of a home. If you need higher values or have unusually precious items, ask your insurer for additional cover.
- Liability protection: Protects against lawsuits for bodily injury or property damage that policyholders, family members or family pets cause to other people. But basic policies start at $100,000 coverage, and you might wish to spring for greater protection if you're worried that's too little.
- Additional living expenses: Pays reasonable costs for accommodation when your home is uninhabitable owing to an insured risk. Check your policy for benefit limits.
Note, most (relatively) inexpensive policies cover the cost of a loss, minus an amount for depreciation. If you want full replacement value, you need to pay more. The gold standard is a "guaranteed replacement cost policy," which "pays whatever it costs to rebuild the home as it was before the fire or other disaster—even if it exceeds the policy limit."
Also read: Homeowners Insurance: When Do You Need It When Buying a Home?
If You Have a Mortgage, Homeowners Insurance Isn't Optional
"Homeowner’s insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary," says federal regulator the CFPB. "When you have a mortgage, your lender wants to make sure your property is protected by insurance. That’s why lenders generally require proof that you have homeowner’s insurance."
In other words, lenders must ensure that their loans are fully secured by real property at all times. And a pile of cinders, or the sticks left over after a flood's torrent, won't do that.
To protect themselves, lenders may use escrow accounts. "Many homeowners pay for their homeowner’s insurance through an escrow
account as part of their monthly mortgage payment," says the CFPB. "You make the payments to the lender, and the lender holds the part of the payment that is for insurance in an escrow account. Then, when the bill for the insurance is due, the lender pays it from the escrow account." The lender may employ the same method for property tax payments.
