Why Is Homeowners Insurance Getting So Expensive?
The recent Los Angeles fires have highlighted the rising costs of homeowners insurance in the US. Between 2020 and 2023, US homeowners insurance premiums rose 33% on average. In some places, insurers are simply cancelling policies entirely, due to a combination of rising insurance costs and state regulations that limit how much insurers can raise rates. This has driven many customers into state-backed insurers of last resort — the number of such policies has doubled since 2018, raising liabilities so much that in many cases it's unclear how the states will fund losses in the event of a large catastrophe. This situation is currently playing out in the aftermath of the LA fires, where the state-backed insurer is estimated to face $8 billion in losses against $377 million in available funding.
Rising insurance costs have led some folks to worry that the world is becoming “uninsurable”: that is, that the risk of disaster is making homeowners insurance (and thus home ownership) either increasingly unaffordable or out of reach entirely.
