Insurance is the hidden bill of homeownership, so price it first

Ask a prospective buyer what a house will cost each month and you'll hear about the mortgage rate and, if they're careful, property taxes. Insurance usually comes last, as an afterthought. The numbers say that order is backwards.

A study from Bloomberg Intelligence, as Kiplinger reports, found that in 75% of US counties, home and car insurance bundled together now cost more than property taxes. Home insurance alone runs about 14% above the tax bill on average in those counties. Add car insurance and the gap reaches 30%. In parts of the Southeast, premiums can be as much as four times a typical property tax bill.

The mortgage rate is the number everyone watches, and the wrong one to fixate on

A mortgage rate is visible, quoted daily and comparable across lenders. An insurance premium is none of those things. It depends on location, on the age of the home and on how an insurer models risk, and in our experience of how these markets work, it can move at renewal without much warning.

The trend is steep. The Levy Institute puts the 2020–2024 rise in premiums at 41.4 percent, against 22.5 percent for cumulative CPI inflation. It also cites First Street research showing insurance rose from 7–8 percent of total mortgage costs in 2013 to 20 percent in 2022. That is a large share of the monthly bill, and in our view it is the part buyers are least able to shop around for before they commit.

The spread across states matters just as much. The same Levy Institute paper cites 2024 average premiums of $14,140 in Florida and $10,964 in Louisiana, against a national average of $3,259. A buyer who compares two houses in different states using only the listing price and the mortgage payment is comparing the wrong things.

Our view is simple: get a real insurance quote before making an offer, and treat it as a line item as important as the interest rate. A cheaper rate that comes with a premium of several thousand dollars more is not a bargain.

Paying more and getting less is the part that should worry us

The headline is the price. The quieter problem is what the price buys. The Levy Institute notes that the Federal Reserve Bank of Minneapolis has described a "shrinkflation" in home insurance, in which standard coverage shrinks while premiums rise. Percentage-based deductibles of 1 to 5 percent of insured value for wind and hail are spreading. So are actual cash value policies, which deduct depreciation from claims instead of covering the full cost of rebuilding.

Harvard Business School professor Ishita Sen warns that some households cut coverage to protect only the lender's interest, leaving their own equity exposed. She also says that in extreme scenarios some may default on mortgages when insurance costs rise a lot. We would add a caution: the average premium hides a growing group who pay more for a policy they may not be able to rely on after a disaster. The Levy Institute also reports that the share of uninsured homeowners more than doubled from 5 to 12 percent between 2015 and 2023.

Policymakers are treating a structural problem as a consumer-tips problem

Much of the advice on offer, including sensible tips like comparison shopping, puts the burden on the individual. That helps at the margin, but we doubt it can fix a market where insurers are pulling out of high-risk areas and where, per Harvard's analysis, state-run last-resort FAIR plans have doubled their policy counts since 2018.

There are signs of movement. NCEL reports that at least 18 states introduced legislation in 2026 to reform insurance programs, many building on Colorado's 2025 law. It requires insurers to be transparent about their risk models and to factor household and community mitigation into pricing. We think that is the right direction, because it lets people see what they can change.

But the harder question, which the Harvard piece says officials are not addressing, is whether to restrict building in vulnerable areas. Regulating insurers cannot make a flood-prone or fire-prone location cheap to cover. It is a forecast, not a certainty, but if that issue stays untouched, we expect affordability pressure to keep spreading.

The verdict

For buyers: quote the insurance first, ask what the deductible is for wind and hail, and check whether the policy pays replacement cost or depreciated value. For current owners: shop at renewal and read what has changed in your coverage, not just the price. For lawmakers: this is no longer a side issue in housing affordability. When home and car insurance together outweigh the property tax bill in three of every four counties, and home insurance alone is already about 14% higher on average in those counties, it is part of the cost of the house.

This is analysis, not personalized advice, and rules and premiums vary widely by state.