Homeowners’ insurance, once considered a final shield for property owners, is crumbling under skyrocketing premiums. Across California and the U.S., middle-class families are increasingly unable to maintain coverage or are giving up on new policies, turning the “home insurance crisis” into a stark reality. According to the Federal Reserve, approximately 7% of homeowners lived without insurance last year, with 43% citing “unaffordable premiums” as the reason. This indicates that rising insurance costs are not just a burden but a threat to the housing stability of middle-class households.

The numbers are staggering. For a homeowner with average credit insuring a $350,000 home for rebuilding costs, the average annual premium has reached $3,303. This marks a 24% increase in just three years, more than double the consumer price inflation rate of 11% over the same period. According to the Insurance Information Institute, national average home insurance premiums have risen 7–9% annually since 2020, with some states seeing double-digit spikes.

The situation varies by state but is particularly dire in some regions. Over the past three years, average premiums have surged 59% in Utah, 50% in Illinois, 48% in Arizona, and 44% in Pennsylvania. In states prone to climate disasters, such as California, Florida, and Texas, insurance companies are increasingly refusing new policies or canceling existing ones, leading to a growing insurance coverage gap.

The insurance industry attributes premium hikes to increased natural disasters due to climate change, rising construction material and labor costs, and growing litigation expenses. However, consumer advocacy groups counter that insurers are “exploiting the climate crisis to pursue excessive profits.” Doug Heller, director of insurance at the Consumer Federation of America (CFA), criticized, “Insurers are pushing countless Americans out of the market with discriminatory underwriting instead of reasonable pricing.

This is a result of greed and regulatory failure.” In California, victim stories are piling up. Consumer advocacy group Consumer Watchdog has highlighted the practice of major insurers drastically underpaying claims for wildfire-damaged homes. For instance, Pasadena couple Rosana Valverde saw their home rendered unusable due to toxic smoke from a January wildfire. Their insurer, State Farm, offered just $70,000 for cleaning costs, despite restoration estimates of $300,000—a grossly inadequate amount. Valverde, who is considering a lawsuit, lamented, “We paid premiums faithfully for 30 years, only to face betrayal and insult.”

Similar frustrations are echoing in the Korean-American community. A Koreatown resident, Kim, shared, “Last year, my home insurance premium jumped from $2,800 to $4,200 annually. With my child’s tuition and living expenses, it’s overwhelming, and I’m considering canceling my policy.” He added, “If something happens to my home, I’d be in trouble, but the monthly premiums are already too much.” Experts emphasize that alleviating the home insurance crisis requires bold cooperation between regulators and insurers.

The growing concern is that the “home insurance crisis” could accelerate the collapse of the middle class beyond being a mere economic issue. A recent U.S. Treasury Department report warned, “In an era where climate disasters are becoming routine, without policies to stabilize premiums, homeownership could become unattainable even for the middle class.” Experts further caution that if current trends continue, soaring premiums could escalate from a housing issue into a broader risk to the financial system.

Reporter: Park Hong-yong