Home Insurance Is Up 22% in Two Years and Now Beats Property Tax in 12 States. Nobody Shops It.

How Much Should Homeowners Insurance Cost?

Start with the number the data gives you. Across the loans AmeriSave closed this year, the typical homeowners premium is $1,800 a year, about 0.46% of the home's value. If yours is well above that and you don't live in a storm or flood state, you have a question worth asking.

Then look at what the bill has done. Over two years, the insurance collected inside the mortgage payment rose 22.3%. Property tax, the line homeowners fight about, rose 0.8% over the same two years. Figure 1 shows the gap.

The result is a payment that changed shape while nobody was looking. Ten quarters ago, insurance was about 39% of the typical escrow payment. Now it's about 45%. In 12 of the 26 states with enough loans to publish, the monthly insurance collection is larger than the monthly tax collection. The flip is most extreme in Alabama, where the typical escrowed homeowner pays $191 a month for insurance and $33 for property tax, so insurance is 84% of the escrow payment. Figure 2 traces the national share by quarter, and the table below lists the twelve states.

At the other end, tax still dominates where it always has. New Jersey's typical escrowed homeowner pays $630 a month in property tax against $169 in insurance, and Massachusetts, Connecticut, and Maryland run the same way. Table 2 shows that end.

After three decades in mortgage finance, my observation is that the process is built so the homeowner never shops the insurance line. The premium on the loan application is a floor: in the data, the application figure runs about 8.5% below the policy that actually gets bound. The servicer renews whatever policy is on file. The escrow analysis that reveals the increase arrives after the money has been collected. Nobody in that chain is paid to find you a cheaper policy.

The Homeowner in Georgia Who Never Called

Picture an escrowed homeowner in Georgia, one of the 12 flipped states. The monthly collection runs about $194 for insurance and $163 for property tax. When the assessment notice arrives, they file an appeal, because everyone they know appeals. When the insurance renewal arrives, they do nothing, because the servicer pays it from escrow and the number never passes through their hands.

Two years of renewals later, the insurance line has grown by more than a fifth and the tax line has barely moved. The escrow analysis raises the payment. The homeowner blames the county.

Two phone calls in two years would have changed the outcome. The premium is the one escrow line you can change without a hearing, a lawyer, or a refinance. Matched coverage, matched deductible, two or three competing quotes, and the new policy on file before the servicer runs its analysis. Your servicer must pay the new policy from escrow once you notify it.

Run the Numbers on a Typical Policy

The data gives two anchors: a typical premium of $1,800 a year and a typical cost of 0.46% of home value. Table 3 applies the second one to common home values, next to the two states where the share runs highest.

If your premium is well above the national column for your home's value and you’re not in a storm or flood state, you have a question worth asking an agent.

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Here is why the re-quote matters more than it looks. In the twelve flipped states the typical insurance line is about $190 a month, or roughly $2,280 a year. If a re-quote with matched coverage trims that by a tenth, the saving is about $228 a year, or $19 a month, which offsets most of the $21.57 monthly escrow increase the typical homeowner saw this year. A re-quote that lands before the servicer's annual analysis changes next year's payment. One that lands after it waits a full cycle.

One more number from the data worth knowing when you buy or refinance. The premium on the loan application runs about 8.5% below the policy that gets bound. On the typical $1,800 application figure, the bound policy is closer to $1,950, which is about $13 a month more flowing into escrow than the estimate showed. Ask for the bound quote before you rely on the number.

What to Check Tonight

Find the declarations page and compare the premium with $1,800 and with 0.46% of what your home is worth. Neither is a rule; both are the center of the data, and a bill far above both deserves a reason.

Find the renewal date and work back four to six weeks. That’s your shopping window. If the renewal falls after your servicer's annual escrow analysis, a lower premium won’t reach your payment until the following year, so the timing matters as much as the quote.

Then look at the whole payment. Budget about 1.5% of home value a year for taxes and insurance nationally, and 2% or more in the heaviest states. If the two moving lines have grown past what the budget can carry, the only lever with enough size is the loan itself.

The full report, Homeowners Insurance Now Costs More Than Property Tax in 12 States, and It Is Up 22% in Two Years, has all 26 states and the two-year detail.

Methodology

The two-year and 12-state figures come from AmeriSave first mortgages that funded with an escrow account, comparing the third quarter of this year with the same quarter one and two years earlier, in states with at least 30 such loans in both periods. The $1,800 premium and the application-versus-policy gap come from all loans funded this year, with premiums taken from the final loan application. Each figure is a median across different loans in each period, so part of any change reflects who borrowed rather than what insurers charged. Data through October 29.

The Bottom Line

The bill that rose 22% in two years is the one almost nobody shops. In 12 states it's now bigger than property tax, and the process is designed to keep it out of your hands. Compare your premium with $1,800, re-quote it before every escrow review, and budget 1.5% of home value for the two moving lines. When those lines outgrow the budget, a rate check against your current loan is the next call, and AmeriSave's rate-and-term refinance is where a lower principal and interest payment can absorb what insurance keeps adding.