Why Homeowners Insurance Costs Are Surging Across the US Market

For Seattle and Puget Sound property owners, the brief signals that the insurance line item on every escrow statement warrants renewed scrutiny. Rising premiums are one of four documented trends, and the geographic spread of those increases is widening.

The premium trajectory and the risk spread

The issue brief synthesizes two anchor datasets:

• Keys and Mulder (2025) extracted individual insurance costs from mortgage escrow accounts and calculated a 63 percent rise in average premiums across 2017–2024.
• A 2025 report from the US Treasury's Federal Insurance Office, drawing on National Association of Insurance Commissioners data, registered an 8.7 percent inflation-adjusted increase over the 2018–22 period.

The industry attributes the gap between premium revenue and claim payouts to rising repair and rebuilding costs, more frequent weather extremes and natural disasters, and litigation expenses, the brief states.

Both studies sort zip codes by disaster risk using FEMA's National Risk Index. In every year from 2014 through 2024, the top risk quintile carried average premiums significantly higher than the four lower quintiles, and the gap expanded over time. The Treasury study reports that consumers in the top risk quintile paid average inflation-adjusted premiums over 2018–22 that were 82 percent higher than those in the bottom quintile. Keys and Mulder (2025) combine FEMA data with private risk modeling from First Street.

Four distinct pressures on one market

RFF frames the strain as four separate trends: rising premiums, increasing policy cancellations and nonrenewals, growth in residual market plans (insurance of last resort), and coverage gaps that fail to keep pace with reconstruction costs. Insurers have responded to underwriting losses by lifting rates and tightening underwriting. The brief synthesizes a growing finance and economics literature and notes that insurance functions as a foundational input to housing and mortgage markets, not merely a discretionary household expense.

What it means for Puget Sound buyers and sellers

Insurance sits inside the closing-cost stack, inside the escrow line, and inside lender approval. The four-pressure framework should be read as the operating environment for any current transaction. Two adjacent properties can carry materially different insurance economics depending on reconstruction cost estimates, claims history, and carrier risk modeling. As the gap between average and high-risk pricing widens, variance across individual properties grows. The market direction is binary: rate compression continues, or dispersion accelerates. Build escrow reserves accordingly.