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How companies can support employees who need to relocate into higher insurance cost areas or retain employees that companies need to have remain there.
Homeowner insurance costs have steadily risen across the U.S., especially in states prone to frequent natural disasters. In these markets, insurance companies often have little choice but to raise rates to protect themselves or stop providing policies altogether, withdrawing from the marketplace.
While home insurance costs may not have been a significant consideration for employees contemplating relocation in the past, employers may soon discover that it is becoming an increasing concern. With inflation and rising costs top of mind for many, employees relocating to higher-premium areas—or seeking to move away to avoid them—may soon base their decisions on more than just salary and benefits.
Why are Home Insurance Rates Increasing?
Taxes and insurance make up more than half of monthly mortgage payments for 9 percent of single-family mortgages in the U.S., up from 4 percent in 2014. Increasing insurance premiums intensify the lack of affordability home buyers already face today. Even for those who own their home outright, rising annual costs pose a significant budget problem.
Understanding the drivers behind the rising costs and addressing them proactively can lead to better outcomes for all:
Reason 1: Natural Disasters
Catastrophes are a key driver: from wildfires in California and the West to hurricanes in Florida and the South, wind and hail in Colorado and the Midwest, and flooding in Vermont and the Northeast.
Americans in the most disaster-prone zip codes in recent years pay 82 percent higher premiums than those in low-risk areas, per a new report from the U.S. Treasury Department (Business Insider).
Florida, California and other states also have faced regular insurance crises as multiple insurers have declared insolvency, non-renewed policies, or left the states entirely. 2025 shows further increases likely, but states prone to frequent natural disasters may experience higher adjustments (Insurify).
- Insight for Employers: Employees relocating to high-risk zones may face significant and unforeseen financial pressure they may not know about.
Reason 2: Construction Costs
Rising material costs and labor shortages have driven up the price of rebuilding homes. For instance, lumber prices and construction labor rates have seen sharp increases in recent years, leading insurers to raise premiums to cover these higher claims costs (TrustedChoice.com).
Additionally, China, Canada and Mexico – top providers of building material imports to the U.S. – are slated for high tariffs proposed by the new administration. If these costs rise because of tariffs and insurance companies have to pay more to repair or replace homes, increases could happen through higher home insurance premiums, per Dean Baker, a senior economist at the Center for Economic and Policy Research.
- Insight for Employers: Encourage employees to invest in risk-reduction improvements, such as energy-efficient upgrades or fire-resistant materials, which may lower premiums and increase property values.
Reason 3: Reinsurance Costs
Reinsurance, a practice where insurers purchase coverage from other companies to share the financial risk of large losses, has become more expensive due to increased payouts for natural disasters.
As an example, in Florida, specialty insurers dominate the state’s residential market and rely on reinsurance to cover nearly 40 percent of the properties. In contrast, in Georgia, national insurance carriers play a bigger role and rely on reinsurers for less than 10 percent of properties. This can explain why inflation-adjusted premiums in coastal counties of northeast Florida rose by about $1,000 between 2018 and 2023, while nearby counties in coastal Georgia increased by less than $500 (The National Bureau of Economic Research).
- Insight for Employers: Exploring company partnerships with insurance providers may help companies save money and manage risks. Partnerships may offer special discounts or create custom insurance plans designed to handle specific challenges, helping businesses address rising costs more effectively.
Reason 4: Insurer Withdrawals & Reduced Competition
Some major insurers in high-risk states are withdrawing from the market, according to TrustedChoice.com, leaving homeowners reliant on limited options such as state-backed insurers of last resort. California and Louisiana have been particularly impacted.
Because lenders typically require homeowners insurance on a property, if a homeowner fails to maintain homeowners insurance, a lender can purchase "force-placed insurance" on their behalf, which is usually more expensive than a regular policy and protects a lender's interest per USAToday.
A study from the Insurance Information Institute found 12 percent of Americans today no longer have home insurance – up from 5 percent in 2019 (USAToday) – the highest level of uninsured homeowners the industry-funded research group has seen. Many of these either own their homes outright and didn’t renew their policies after satisfying the mortgage, or did not find another policy when the one they had was not renewed. The proportion of uninsured owners rose in some major metro areas, especially in Miami, where 21.2 percent of homeowners went without insurance in 2023, up from 14.5 percent in 2021 per the Wall Street Journal.
NEI does not recommend forgoing insurance, as homeowners would be gambling that a catastrophe won’t occur, especially with most people’s net worth tied up in their homes..
- Risk of Inaction: Employees may have been hit with high, unexpected premium spikes which could lead them to increased financial pressure and/or company relocation offer refusals. Offering resources to navigate insurance markets/options can improve the relocation experience.
Assisting Employee Retention and Relocation Acceptance
While the factors behind state’s rising premiums are systemic, there are actionable strategies for employees to try mitigating rising insurance rates:
- Consider Risk Reduction Credits: Promote state-specific home improvements that qualify for insurance discounts (installing storm shutters, impact-rated windows, wind-rated garage door, upgrading roofing materials, etc.).
- Lower Deductibles: Understand how raising the policy deductible may impact annual premiums and ask if an insurance agent can help identify any unknown discounts so they don’t have to switch insurance companies.
- Shop Around: Comparing quotes across providers can be cost-effective. Direct employees to resources or brokers who specialize in competitive insurance quotes. Seek out experienced insurance brokers who can access different options.
- Increase Bundling: Many insurers offer discounts for bundling multiple policies (like home, life, auto) or installing security and monitoring systems like smoke detectors and water sensors. These measures lower risks and insurance costs.
From an Employer perspective, some organizations may also be able to form partnerships with insurers to offer employees better group discounts or corporate-sponsored policies for employees, just as done with health and life insurance. This should be investigated at each company’s discretion.
Call to Action: Support Knowledge Sharing and Changes Employees Can Make
Rising homeowner's insurance premiums present hidden risks for employees and significant challenges for HR and relocation professionals. These challenges include both increased costs and the risk for those who go without insurance, as well as for those who decide not to relocate to expensive states or leave to save money.
Proactively addressing the issue and helping employees learn and understand what steps they can take, as outlined above, will position the company as an interested, trusted partner in their employees’ well-being.
If you have questions or would like to discuss any relocation-related issue further, please contact your NEI Client Relations Manager or NEI Client Development contact at 800.533.7353 any time.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.
How companies can support employees who need to relocate into higher insurance cost areas or retain employees that companies need to have remain there.
Homeowner insurance costs have steadily risen across the U.S., especially in states prone to frequent natural disasters. In these markets, insurance companies often have little choice but to raise rates to protect themselves or stop providing policies altogether, withdrawing from the marketplace.
While home insurance costs may not have been a significant consideration for employees contemplating relocation in the past, employers may soon discover that it is becoming an increasing concern. With inflation and rising costs top of mind for many, employees relocating to higher-premium areas—or seeking to move away to avoid them—may soon base their decisions on more than just salary and benefits.
Why are Home Insurance Rates Increasing?
Taxes and insurance make up more than half of monthly mortgage payments for 9 percent of single-family mortgages in the U.S., up from 4 percent in 2014. Increasing insurance premiums intensify the lack of affordability home buyers already face today. Even for those who own their home outright, rising annual costs pose a significant budget problem.
Understanding the drivers behind the rising costs and addressing them proactively can lead to better outcomes for all:
Reason 1: Natural Disasters
Catastrophes are a key driver: from wildfires in California and the West to hurricanes in Florida and the South, wind and hail in Colorado and the Midwest, and flooding in Vermont and the Northeast.
Americans in the most disaster-prone zip codes in recent years pay 82 percent higher premiums than those in low-risk areas, per a new report from the U.S. Treasury Department (Business Insider).
Florida, California and other states also have faced regular insurance crises as multiple insurers have declared insolvency, non-renewed policies, or left the states entirely. 2025 shows further increases likely, but states prone to frequent natural disasters may experience higher adjustments (Insurify).
- Insight for Employers: Employees relocating to high-risk zones may face significant and unforeseen financial pressure they may not know about.
Reason 2: Construction Costs
Rising material costs and labor shortages have driven up the price of rebuilding homes. For instance, lumber prices and construction labor rates have seen sharp increases in recent years, leading insurers to raise premiums to cover these higher claims costs (TrustedChoice.com).
Additionally, China, Canada and Mexico – top providers of building material imports to the U.S. – are slated for high tariffs proposed by the new administration. If these costs rise because of tariffs and insurance companies have to pay more to repair or replace homes, increases could happen through higher home insurance premiums, per Dean Baker, a senior economist at the Center for Economic and Policy Research.
- Insight for Employers: Encourage employees to invest in risk-reduction improvements, such as energy-efficient upgrades or fire-resistant materials, which may lower premiums and increase property values.
Reason 3: Reinsurance Costs
Reinsurance, a practice where insurers purchase coverage from other companies to share the financial risk of large losses, has become more expensive due to increased payouts for natural disasters.
As an example, in Florida, specialty insurers dominate the state’s residential market and rely on reinsurance to cover nearly 40 percent of the properties. In contrast, in Georgia, national insurance carriers play a bigger role and rely on reinsurers for less than 10 percent of properties. This can explain why inflation-adjusted premiums in coastal counties of northeast Florida rose by about $1,000 between 2018 and 2023, while nearby counties in coastal Georgia increased by less than $500 (The National Bureau of Economic Research).
- Insight for Employers: Exploring company partnerships with insurance providers may help companies save money and manage risks. Partnerships may offer special discounts or create custom insurance plans designed to handle specific challenges, helping businesses address rising costs more effectively.
Reason 4: Insurer Withdrawals & Reduced Competition
Some major insurers in high-risk states are withdrawing from the market, according to TrustedChoice.com, leaving homeowners reliant on limited options such as state-backed insurers of last resort. California and Louisiana have been particularly impacted.
Because lenders typically require homeowners insurance on a property, if a homeowner fails to maintain homeowners insurance, a lender can purchase "force-placed insurance" on their behalf, which is usually more expensive than a regular policy and protects a lender's interest per USAToday.
A study from the Insurance Information Institute found 12 percent of Americans today no longer have home insurance – up from 5 percent in 2019 (USAToday) – the highest level of uninsured homeowners the industry-funded research group has seen. Many of these either own their homes outright and didn’t renew their policies after satisfying the mortgage, or did not find another policy when the one they had was not renewed. The proportion of uninsured owners rose in some major metro areas, especially in Miami, where 21.2 percent of homeowners went without insurance in 2023, up from 14.5 percent in 2021 per the Wall Street Journal.
NEI does not recommend forgoing insurance, as homeowners would be gambling that a catastrophe won’t occur, especially with most people’s net worth tied up in their homes..
- Risk of Inaction: Employees may have been hit with high, unexpected premium spikes which could lead them to increased financial pressure and/or company relocation offer refusals. Offering resources to navigate insurance markets/options can improve the relocation experience.
Assisting Employee Retention and Relocation Acceptance
While the factors behind state’s rising premiums are systemic, there are actionable strategies for employees to try mitigating rising insurance rates:
- Consider Risk Reduction Credits: Promote state-specific home improvements that qualify for insurance discounts (installing storm shutters, impact-rated windows, wind-rated garage door, upgrading roofing materials, etc.).
- Lower Deductibles: Understand how raising the policy deductible may impact annual premiums and ask if an insurance agent can help identify any unknown discounts so they don’t have to switch insurance companies.
- Shop Around: Comparing quotes across providers can be cost-effective. Direct employees to resources or brokers who specialize in competitive insurance quotes. Seek out experienced insurance brokers who can access different options.
- Increase Bundling: Many insurers offer discounts for bundling multiple policies (like home, life, auto) or installing security and monitoring systems like smoke detectors and water sensors. These measures lower risks and insurance costs.
From an Employer perspective, some organizations may also be able to form partnerships with insurers to offer employees better group discounts or corporate-sponsored policies for employees, just as done with health and life insurance. This should be investigated at each company’s discretion.
Call to Action: Support Knowledge Sharing and Changes Employees Can Make
Rising homeowner's insurance premiums present hidden risks for employees and significant challenges for HR and relocation professionals. These challenges include both increased costs and the risk for those who go without insurance, as well as for those who decide not to relocate to expensive states or leave to save money.
Proactively addressing the issue and helping employees learn and understand what steps they can take, as outlined above, will position the company as an interested, trusted partner in their employees’ well-being.
If you have questions or would like to discuss any relocation-related issue further, please contact your NEI Client Relations Manager or NEI Client Development contact at 800.533.7353 any time.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.
