Why Are Your Insurance Premiums So High?

Homeowners and drivers are experiencing seemingly ever-increasing prices for insurance. Even those with no claims and good driving records are feeling the pain. You may be asking, “What is going on, and how can I lower my insurance costs?”

Homeowners and condo insurance

Property insurance is the first part of your home insurance policy. It helps you recover if you experience a fire, theft, vandalism, or water or storm damage. It covers building contents, construction materials and labor. And with coverage for additional living expenses, it also pays for temporary housing if your home is rendered uninhabitable.

The price of property insurance has increased by about 21% over the past few years, according to the insurance marketing platform Trusted Choice. This increase has been driven by several factors, including:

• The rising value of houses

• The increased cost of repairs

• Population growth in disaster-prone areas

• Financial pressures on insurance companies

• Fraudulent and padded claims

• Legal system abuse

One of the biggest drivers of home insurance premiums is the cost of structural repairs. That alone is up 61% over the past decade, according to Verisk’s Repair & Remodel Index. The increase is due to the rising expenses of qualified labor, construction materials and meeting updated building codes.

Where you live has a lot to do with your premiums. Properties located in disaster-prone areas have seen skyrocketing insurance premiums over the past three decades, making some locales almost unaffordable. Several Gulf states have taken measures to prevent lawsuit abuse and attract more insurers in an effort to ease prices, but insurance is still very costly in coastal regions.

In wildfire-prone areas, some insurers have exited the market. This has driven residents to state-run insurance or surplus lines markets, both of which are expensive. (The surplus lines market covers risks that standard insurers can’t or won’t insure, like high-risk properties.)

Additionally, if you live in a community with a low Insurance Services Office (ISO) fire rating, your home insurance premium will be higher. A low ISO rating reflects too few firefighting resources or water access problems.  ISO fire ratings are often kept private, but you can request yours from your local government and explore ways to improve it if it’s low.

If you have made a claim recently, your premium could rise. And if you’ve expanded the square footage of your home, you will likely pay more because there is a greater value exposed to potential loss.

Personal liability insurance is the second component of your homeowners, renters or condo policy. There is a nominal amount of personal liability coverage in a standard policy, typically around $100,000. The cost of increasing that, even to $500,000, hasn’t drastically increased over the past decade.

However, people with more than that amount in assets and those with swimming pools, trampolines or water landscaping features are vulnerable to high-value liability lawsuits. For example, a neighbor’s child may wander into your yard and injure themselves on your trampoline. In this case, your neighbor may allege you were negligent and responsible for their child’s injury. Lawsuits like this often put homeowners on the hook for lost income, medical expenses and legal fees.

For those with very high income or high net worth, a personal umbrella insurance policy may be the best option. And that kind of additional insurance is growing in cost. Numbers from AM Best, the International Risk Management Institute and the National Council on Compensation Insurance indicate an 8% to 10% premium increase per year since 2020. This applies to personal umbrella policies and personal liability riders you can add to your home or renters policy.

Personal umbrella policies typically cover home and auto liability. Their premiums are rising particularly because of the auto liability component, which has experienced a substantial increase in frequency of lawsuits and severity of verdicts. Even if you have never had a claim, your insurance reflects the overall exposure of insurers to court costs and verdicts or settlements.

Personal auto insurance

Car repair costs have decreased by 5% in 2024 compared to 2023, according to CarMD’s Vehicle Health Index from April 2025. Yet auto insurance prices haven’t decreased as a result.

In fact, auto insurance costs are rising faster than home insurance costs, They rose by 16.5% in 2024, and are projected to increase another 7.5% in 2025, according to January numbers from LendingTree. Worse, insurance for new electric vehicles is expected to run about 23% higher than insurance for new gasoline-powered vehicles.

So, what’s driving these premium increases? Despite lower repair costs, the severity of property and injury claims from auto accidents is on the rise. LexisNexis Risk Solutions reports a 2.5% increase in property damage severity and a 9.2% increase in bodily injury severity from auto accidents in 2024. The cost of medical treatment for injuries is a major factor in liability pricing, as are high liability verdicts for permanently disabling injuries and fatalities.

Additionally, car insurers are having to pay for damage done by uninsured motorists and are raising prices on insured drivers to cover those losses. The Insurance Research Council reports that about one in seven motorists in the U.S. is uninsured.

The good news: The inflation trend in auto insurance appears to be downward, meaning prices are still rising, just not as rapidly. Still, your own insurance may be higher than the national average based on your type of car, its age, your credit score, your claims history, moving violations you’ve received, and the crime rate and weather in your area.

How to reduce your insurance premiums

The most important thing you can do to reduce your home and auto premiums is to prevent claims. Securing and maintaining your home are the best ways to reduce your chances of theft and damage. You can also install monitors, such as fire and water-leak sensors, or use vehicle telematics (which record data about your driving behaviors), for a discount on your home and auto premiums.

If you're looking for the best coverage with your budget it mind, contact our expert agents at 505.883.3683 or visit mianm.com/contact