Your mortgage payment isn’t the full story. New research from Zillow and Thumbtack reveals American homeowners now spend nearly $16,000 annually on costs beyond their mortgage—and insurance premiums account for a growing chunk of that burden.
The numbers hit hardest in Florida. Miami and Jacksonville homeowners watched their insurance bills jump 72% since 2020, averaging $4,607 per year in Miami alone. That’s not a typo. While your income crept up 3.8% last year, these hidden costs climbed nearly 5%, squeezing budgets tighter every month.
Here’s what changed, where it hurts most, and what you’re actually paying for when you own a home in 2025.
The $16K Reality: What Hidden Costs Actually Include
When Zillow and Thumbtack crunched the numbers, they found three major expenses eating into homeowner budgets beyond mortgage payments:
- Maintenance and repairs: $10,946 annually on average. That’s nearly $900 per month for fixing what breaks, updating what ages, and preventing bigger problems down the road.
- Property taxes: $3,030 per year. Varies wildly by location, but it’s another monthly bill you can’t skip.
- Homeowners insurance: $2,003 nationwide average. Except in disaster-prone cities, where this number doubles or triples.
Add it up. You’re looking at over $1,300 monthly on top of your mortgage payment, assuming you’re hitting national averages. In high-cost cities? Double that.
Why Insurance Premiums Jumped 48% Since 2020
Nationwide, home insurance costs surged 48% in five years. Three factors explain the spike:
First, natural disasters got expensive. Hurricanes, wildfires, and flooding now cost insurers billions annually, and they’re passing those losses to policyholders through premium increases. Second, construction costs soared during pandemic supply chain chaos and haven’t normalized—rebuilding your home after a claim costs 30-40% more than in 2020. Third, litigation costs exploded in states like Florida, where lawsuits over claims became an industry crisis.
The result? Your premium reflects not just your home’s risk, but the entire system’s financial stress.
8 Cities Where Insurance Costs Exploded
Some markets got hit harder than others. Here’s where homeowners face the steepest increases since 2020:
| City | Premium Increase | Current Avg Cost |
|---|---|---|
| New Orleans, LA | 79% | Data not specified |
| Miami, FL | 72% | $4,607/year |
| Jacksonville, FL | 72% | Data not specified |
| Tampa, FL | 69% | Data not specified |
| Orlando, FL | 68% | Data not specified |
| Sacramento, CA | 59% | Data not specified |
| Atlanta, GA | 58% | Data not specified |
| Riverside, CA | 56% | Data not specified |
Notice a pattern? Four of the top five hardest-hit cities sit in Florida. Hurricane exposure, fraud litigation, and insurer exits created a perfect storm (pun intended) for premium inflation.
New Orleans tops the list at 79%, reflecting ongoing hurricane risk and a struggling insurance market post-Katrina. California cities like Sacramento and Riverside climbed the rankings as wildfire seasons grew longer and more destructive.
How This Squeezes Your Monthly Budget
Breaking down Miami’s $4,607 annual premium: That’s $384 per month just for homeowners insurance. Add maintenance costs ($912/month) and property taxes ($253/month), and you’re spending $1,549 monthly on hidden homeownership costs.
Compare that to income growth. Household incomes rose 3.8% nationally last year. Hidden homeownership costs? Up nearly 5%. The math doesn’t work in homeowners’ favor, especially in markets where insurance alone ate up 10-15% of median household income.
For someone earning Miami’s median household income of roughly $44,000, that $4,607 insurance bill represents over 10% of gross income. Before mortgage payments. Before utilities. Before groceries.
3 Moves to Manage Rising Insurance Costs
You can’t control market trends, but you’re not helpless. Consider these strategies:
- Shop aggressively every renewal period. Loyalty rarely pays in insurance markets undergoing rapid change. Get quotes from at least 3-5 carriers annually. Regional insurers sometimes offer better rates than national brands in high-cost markets.
- Increase your deductible strategically. Moving from a $1,000 to a $2,500 deductible can cut premiums 15-25% in disaster-prone areas. Just make sure you can cover that deductible from emergency savings if needed.
- Document and upgrade home protections. Storm shutters, reinforced roofs, and updated electrical/plumbing systems can qualify you for discounts. In Florida specifically, fortified roof ratings can reduce premiums significantly. Take photos, keep receipts, and notify your insurer when you complete upgrades.
One more option gaining traction: state-backed insurance programs. Florida’s Citizens Property Insurance and California’s FAIR Plan serve as insurers of last resort, though they come with coverage limitations and their own premium increases.
Will Premiums Keep Climbing in 2026?
Short answer: Probably, but maybe not this fast.
Industry experts predict continued increases through 2026, driven by ongoing climate risk and inflation in construction costs. However, the rate of increase may slow in some markets as insurers finish repricing their books and new capacity enters struggling markets.
Florida passed insurance reform legislation in 2022 aimed at reducing litigation abuse, but premium impacts take 2-3 years to fully materialize. Some analysts project Florida’s rate of increase could moderate by late 2025 or early 2026 if reforms work as intended.
California’s insurance market faces different pressures. State regulators historically limited rate increases, causing major insurers to exit or freeze new policies. Recent regulatory changes allowing insurers to factor in reinsurance costs more accurately may stabilize the market but won’t reverse premium gains already implemented.
Bottom line? Budget for increases, but monitor your market for stabilization signals.
Frequently Asked Questions
Why did Florida insurance premiums increase 72% when other states saw smaller jumps?
Florida faces a unique combination of hurricane exposure, litigation abuse (assignment of benefits fraud), and multiple major insurers exiting the market between 2020-2023. When State Farm, Farmers, and others pulled out, remaining insurers absorbed higher-risk policies and raised rates accordingly. Additionally, reinsurance costs (insurance for insurance companies) spiked dramatically in Florida, and those costs get passed directly to policyholders.
Can I afford to own a home if insurance costs keep rising?
It depends on your location and income stability. The traditional 28% housing cost rule (total housing costs shouldn’t exceed 28% of gross income) gets harder to meet when insurance jumps from $1,500 to $4,600 annually. Run updated affordability calculations including realistic insurance estimates for your specific area before buying. In extreme cases like Miami, some buyers are reconsidering homeownership or looking at different markets entirely.
Should I expect maintenance costs to climb along with insurance?
Yes. The $10,946 average maintenance cost reflects current construction and labor rates, which remain elevated compared to pre-2020 levels. HVAC replacements, roof repairs, and plumbing work all cost 25-35% more than five years ago due to supply chain issues and labor shortages. Factor in at least 1-2% of your home’s value annually for maintenance, more if your home is over 15 years old.
Are there any markets where hidden homeownership costs actually decreased?
The Zillow report doesn’t identify markets with decreasing costs, suggesting widespread increases across all measured cities. However, markets with stable weather patterns, strong insurer competition, and effective state regulation (like parts of the Midwest) likely saw smaller percentage increases than disaster-prone coastal areas. If you’re shopping for affordability, look beyond purchase price to total cost of ownership including these hidden expenses.
How does the 48% national insurance increase compare to other expenses?
A 48% increase over five years significantly outpaces most other household expenses. For comparison, overall inflation rose roughly 20-22% during the same period, while wages increased 19-21% on average. Home insurance premiums grew more than twice as fast as general inflation, making it one of the fastest-rising homeownership costs alongside property taxes in high-growth areas. Only certain categories like auto insurance (up 35-40%) came close to matching home insurance’s rate of increase.
The Bottom Line
Nearly $16,000 per year in hidden costs changes the math on homeownership. That Florida dream home with a $2,000 monthly mortgage carries another $1,500+ in unavoidable expenses, pushing all-in housing costs above $3,500 monthly.
Insurance premiums drove much of the increase since 2020, with the sharpest pain concentrated in disaster-exposed markets. While you can’t escape rising costs entirely, shopping aggressively, increasing deductibles strategically, and fortifying your home can slow the bleeding.
Check your city’s increase rate in the table above. If you’re facing a 50%+ jump, it’s time to revisit your budget and insurance strategy before your next renewal hits.