Our Insurance went up by $2,000. Then another $2,000. Here’s our story.
Fire and Flood Insurance Is Missing, Not Just Understated
Is home fire insurance a part of the CPI?
This index includes contents coverage for both renters and homeowners, as offered in standardized policies. However, it’s important to note that the approach used for owners’ equivalent rent (OER) excludes certain aspects of homeowners’ insurance, like coverage for physical damage to the structure and liability, according to the Bureau of Labor Statistics.
The BLS says homeowners and tenant insurance index has risen from 152 to 165 in since January 2019.
The total increase is 8.6 percent. Sound right?
What’s the Insurance Weight?
The BLS says shelter is 35.473 of the CPI. Of that, Tenants’ and household insurance is allegedly 0.414 percent.
Sound right?
If you own a home, what percent of your income is spent on your homeowners’ insurance?
Under 1/2 of 1 percent?
Not Counted
The BLS does not include insurance in the CPI as the average person understands insurance.
Nor does the BLS include property taxes or home prices directly.
I understand the manipulative rationale. The BLS says these are capital expenses or operating expenses, not “consumer expenses”.
Lovely. To these pea-brain economists, only “consumer” expenses matter.
In the real world, all of these expenses matter.
A $2,000 Jump, Then Another
Our homeowners’ insurance went up $4,000 in two years.
I won’t name the company, but it is one everyone would recognize.
My mama told me, you better shop around.
We switched to another very big name that everyone would also recognize. We saved $5,000 a year!
I suspect the company we were with was overly invested in parts of the country with severe fire, flood, or hurricane damage.
Regardless, please, check your rates.
Case-Shiller Home Prices
The Case-Shiller Home Price Index declined another 0.3 percent in May.
On July 29, 2025, I commented The Housing Top Is Likely In, Case-Shiller Home Prices Drop Again
Percent Change Since January 2020 (Through May)
- Case-Shiller National: 52.1%
- Case-Shiller 10-City: 52.4%
- OER: 44.9%
- CPI Rent: 28.0%
- CPI: 24.3%
Home prices are up 52 percent. That means replacement costs are up 52 percent.
Since fires are increasing and replacement costs rising, insurers have been raising rates. Yet, the BLS tells us that “insurance” is only up 8.6 percent since 2019.
Yeah right.
Supposedly, Rising Home Prices Is a Benefit
Hoot of the Day: “Home prices are very high, but this is a good thing for the 65% of households who own them.“
Excuse me for pointing out property taxes and insurance.
And think about replacement. If you sell your home, will you live on the street?
There may be a benefit to speculators, but there is no benefit to home price inflation for homeowners who live in their home.
Inflation benefits those with first access to money. The beneficiaries includes the banks, the government, and the wealthy, to the detriment of everyone else.
But hey, content replacement insurance is only up a total of 8.6 percent in the last 6.5 years.
So look on the bright side, Trump Says There Is ‘Virtually No Inflation.’
Here’s proof.
“Drug prices are down 1,500 percent. I don’t mean 50 percent.”
That’s quite an amazing achievement given that down anything over 100 percent means they drug companies are paying us to take drugs.
Related Posts
July 15, 2025: Year-Over-Year CPI Jumps 0.3 Percentage Points to 2.7 percent
Month-over-month and year-over-year the CPI rose 0.3 percent.
July 31, 2025: No Improvement in the Fed’s Preferred Measure of Inflation for 8 Months
Core PCE is up 2.8 percent from a year ago, no change in 8 months.
Q: Does the PCE count property taxes or insurance?
A: Of course not , silly, for the same ridiculous reasons as the CPI.
Supposedly, only consumer expenses matter and neither property taxes nor insurance are consumer expenses.
Shopping around is not an option in CA. If you can get anything you are lucky. If you can afford to pay for it you are luckier still. This is true even in areas where there simply is not going to be a wildfire problem, because companies want to get out of here. I have a friend whose condo association has had no insurance at all for several years; supposedly this is impossible but apparently not.
Thanks – Not surprised about CA at all.
We are nowhere near a fire zone, flood zone, or earthquake zone and for no reason had our rates jump.
In CA, the “last resort” insurance program contained very little money and was instantly depleted by the LA fires. It will be replenished with a surcharge on people who buy insurance through regular companies. Supposedly that is fair because it keeps property values up for everyone. What it means is that people who go out of their way to buy in a low risk area, will be paying a surcharge to cover insurance costs for people who buy in a high risk area. As a bonus, the “last resort” insurance is very costly and lousy coverage.
You stated that “…fires are up…”. I wonder if they are actually up, or has the massive home building over the past fifty yrs. simply created more “targets” that weren’t there in past!? I live in Oklahoma with the tornado threat each year, and the famous town of Moore keeps getting damaged by tornadoes. Historically Moore has been hit by 10 of the 15 worst tornadoes to hit Ok City since 1910, and in the past forty yrs., the number of houses built has increased by 2x! Moore is therefore now a “target rich environment” for tornadoes, which have always had an increased propensity to travel through there.
I can only speak from experience on inflation that has been significantly understated for a long period of time.
You should always shop around for insurance!
One example everyone over 65 can relate to is Medicare “gap” insurance, usually referred to as Medigap insurance. Medigap covers the gap, which is amount that Medicare doesn’t cover on services, which seems to vary between 20-25% of the amount that Medicare allows.
There are 6 plans referred to by letters (F, G, K, L, M & N). As mandated by law, the benefits are THE SAME for each letter but the price varies significantly between providers!
When I last checked my rates for Plan N, they ranged between something like $130-$275/month. All with the exact SAME BENEFITS, although some will throw in extras on top such as relatively low cost gym memberships like Silver Sneakers.
It’s not always so easy to shop around in some markets, like FL and CA. The number of insurers who are writing new policies can be counted on a couple of fingers in some areas.
My homeowners insurance went up just a little this year after a 34% increase the year before. We are lucky and do not have to have flood insurance. We did have a beach house with a mortgage, required to have flood insurance. It was built on pilings and the flood insurance did not cover anything. Read your flood insurance paperwork. There is also a cap of $200,000, which will not cover most beach houses.
Yes, read your homeowners insurance policy from cover to cover as some companies are raising deductibles without advising you or pointing this out, in addition to raising premiums but probably less than last year.
I feel fortunate to have sold all of my Florida real estate a few years ago. Unaffordable insurance and the tremendous risk of catastrophic loss is real.
For me, the risk~reward basis is not worth the three months of a favorable climate. Nine months of the year, South Florida is way too hot/humid for my taste and I prefer to rent nice places than own anything in Florida. Real estate is super soft there now.
As regards the cost of insurance? It is real, mine went up 40% over the past two years. I am considering going naked and only carrying liability.
If the insurance cost was accurately factored into inflation, Trump would fire the messenger… ;-(
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This post makes me wonder why anyone gets upset over the firing the head of the CPI gov agency…
Agree . same for trying to do something in DC different from the same old
failed dem policies for the last 50 years and the place is a crime infested Sh***t hole.
As soon as trump tries to do something different they scream bloody murder but their policies have produced third world living conditions and a very dangerous place and to think it is the capitol city of the USA the wealthiest Nation on earth ! Their answer is to double down and triple down on failed policies and waste more money on proven failure . Those policies have produced more homelessness and despair not less
For personal lines, such as homeowners and auto policies, there is a third party liability side and a first party side.
We were 50+years with AMICA.
In Colorado, got a 60% increase notice in homeowners.
Also had auto (1) and umbrella.
Our neighbors had State Farm and have been happy. We had a huge hailstorm in 2017.
Switched to State Farm and saved $1700/year for all 3 policies.
U tube Dr Casey Peavier with prof Seyfrield part I and II: u can be cured from
cancer and chronic diseases, spending a few dollars instead of $300,000. U have to fast in stepping stones, to starve cancer cells, to weaken them, before shocking them with low doses of toxic medicine….Weakening and shrinking, before reducing their threats. In a ketonic state healthy cells are protected from toxic environment. Cancer cells are not. Prof Seyfried criticizes medical schools, pharma, oncologist and the food industry, which gang together against us and our children. His ideas are great for Preventive Medicine.
Watch the video pretty scary.
Make cost of living unaffordable then criminalize poverty
https://citizenwatchreport.com/make-cost-of-living-unaffordable-then-criminalize-poverty/
And the hits keep coming
AI job losses put millions of homes and infrastructure at risk of decay and collapse
Just watched Trump interview (supposedly on DC military takeover): The poor guy is almost inarticulate, unfocused, can’t stay on track and has no idea what he is talking about. Rambled on about the chip sector and had to have hand picked questions instead of answering what the reporters want to ask him about. Rambled on about the Ukraine situation and Russia taking ocean front property.
Who is Trump working for?
Dont worry he will just blame his loss of mental capacity on biden or obama and his followers will belive him.
I think you were watching Biden reruns…
When home prices, mortgage, maintenance, taxes and insurance cost will be low
enough and the average wage will rise above $31/hour zoomers and millennials
might buy houses. But first, they have to get rid of auto loans, student loans and c/c
loans debt, before accumulating savings. It will take a long time, but it will be done.
Excellent article, Mish!
I would love to see the new BLS commission tackle this MAJOR discrepancy. Like utilities, insurance is an operating expense. In addition, the massive standard deduction means very few low to middle income homeowners are itemizing their returns, so they lose taking advantage of their property tax payments.
Together, these costs are making it more difficult to own a home and make no sense being considered a capital expense.
I will mention names in hopes that many of you can save money as well. I canceled my Allstate policy this morning and replaced it with another company. I also added a vehicle. I am now paying less for two vehicles and a house than I was paying for one vehicle and a house.
Yes, you better shop around!
I know wrong place but another example of the creep to martial law.
Trump Invokes D.C. Home Rule Act, Set To Deploy National Guard In Law-And-Order Push
David Doney chart is great, but I couldn’t find it on Fred. The next downturn might be
an A-B-C down. A to 10K/11K, B up, C decays to 8K.
“Home prices are up 52 percent. That means replacement costs are up 52 percent.”
This isn’t a valid statement. A large amount of the price appreciation will be simply the underlying land value (location).
My home in Florida has more than doubled in price appreciation (according to Zillow / Realtor etc) since I bought it in early 2020 but my insurance replacement cost in the policy does not reflect that (it’s only increased by about 1/3 since much of the appreciation is due to the land value).
I bet your payment is up more than 1/3, but you make a great point.
And your insurer has a vested interest in potentially undervaluing the replacement cost of your home in areas like Florida.
I’ve been saying for a while now that insurance needs to have some guard rails put on it. I get the need to spread the costs over a lot of insurers, but whatever is going on in the Florida home insurance market shouldn’t be allowed to affect my insurance rates in GA. While I could be wrong, I believe insurers are raising rates due to three main things: fires out west, hurricanes along the gulf coast, and roof replacements in hail prone areas.
I have a friend who had his roof replaced by insurances to the tune of $26K which is at least $10K more than what it should cost. Again, insurers have a vested interest in just rubber-stamping roof replacement costs, because it lets them increase premiums / profits.
Insurance – an ingenious modern game of chance in which the player is permitted to enjoy the comfortable conviction that he is beating the man who keeps the table.
Ambrose Bierce
So your insurance is down by $1,000? That’s a lot better than up 8.6%. For everyone else who has seen large increases, shop around, it’s very easy.
Agree. The article is not about inflation, it’s about how to shop around… Sadly, even analysts miss the boat some times.
It’s about both inflation and shopping around for a deal.
Auto loans, student loans and c/c loans delinquencies might rock. Zoomers and millennials can’t buy a house. MAGA and the radical left have two things in common: a strong anti Israeli sentiment and they can’t buy a house, even with lower mortgage rates and lower SPX.
Ok now do property taxes.
My area the Swedes and Italians kind of hate each other. But they are the old home owners. Plus the nepotism and cronyism runs deep. Ain’t no one gonna pull that trigger first.
There has not been a new assessment since 2003.
Outside the city the once rural areas are getting banged and reassessed every two years because people are purchasing lakefront properties that were dives and building new expensive homes.
And those increased evaluations will increase their tax burden and insurance rates.
We ended up dropping our home insurance (house paid off). We live rural outside fire districts so insurance companies that would cover were limited and fairly expensive. Fire is the only real danger in our area. We just stay proactive clearing away from the house and have water systems available on the property to mitigate any fire that may start. We built the house ourselves so I know the wiring is up to spec and is not an issue.The amount of money saved and invested over 10-15 years will help pay for any accident that may (but probably won’t) happen.
Similar on our auto insurance. We either carry liability only, or, if we want full coverage, carry a high deductible. With decades of driving experience between us with no at fault crashes, we figure it’s not so scary to carry minimal insurance since we have never used it.
HAHAHA. NYS if a homeless person is injured breaking into your garage you are liable.
I have been advised by at least two people that if I am ever attacked to drag that person inside and finish the job, than doing it in public because I would be sued for defending myself.
I guess that is one more reason not to live in NY.🤷♂️
We wouldn’t have much of a chance of anyone wandering around and breaking in where we live. That and having the place fenced and gated is a deterrent.
Fenced and gated you might look up what B&E people see as inviting homes. Fenced is one because it “hides” them.
You have the quick not planned robbery types and your fence protects you.
Then you have the ones that scout the house, know where the cameras are, know where the main power is, and know if you have actual valuables.
The snatch and dash type are mostly drugged out desperate the same kind that rob you in a parking lot.
The second kind mostly never get caught.
The best kind are the ones you never know have broken in and what they stole.
Those are real level pro.
We ended up dropping our home insurance (house paid off). We live rural outside fire districts so insurance companies that would cover were limited and fairly expensive. Fire is the only real danger in our area. We just stay proactive clearing away from the house and have water systems available on the property to mitigate any fire that may start. We built the house ourselves so I know the wiring is up to spec and is not an issue.The amount of money saved and invested over 10-15 years will help pay for any accident that may (but probably won’t) happen.
Similar on our auto insurance. We either carry liability only, or, if we want full coverage, carry a high deductible. With decades of driving experience between us with no at fault crashes, we figure it’s not so scary to carry minimal insurance since we have never used it.
You just invited Mr. Earthquake to come visit.
Standard home insurance doesn’t cover earthquakes, you need separate coverage for those.
No claims on this property for 35 years.
+51% since 2019.
Would have been more but increase deductible, change roof coverage, etc..aka take on more personal risk and relieve them of the areas most at risk anyway.
Again, insurance is up not only due to claims but our love affair with holding onto the massive passive capital gains on everything. Love home prices doubling then love insurance premiums protecting that. Love stock prices doubling then enjoy the government debt that created it and the inflation that came with it. Until and unless we allow it to deflate it not only won’t change but it cannot change as they are linked hand to glove.
Having the masses complicit via 401k and IRAs nearly ensures there will be no price reductions on assets, thus all that comes with it including insurance prices. How long did el Presidente allow the stock market to decline when he first announced tariffs in April…a week? See our reaction to every downtick? Stimulus, rate reductions, QE.
You just wrote a post on a tiny bit of home price declines in a large section of the country with the underlying implication/tone that, whew, we got some relief and, if it persists we’ll have to take immediate steps to arrest that. We don’t have the stomach to let the number-on-a-page go down from its all time high.
So we get to “enjoy” our homeowners insurance cost (and property taxes) while we live in the appreciated asset.
One smaller insurer in the state of Florida was just granted a 31% increase in premium rates. It will affect over 20K customers. It is estimated that the average increase per policy holder will amount to $!500/yr. I live in Florida (inland) and I have increased my hurricane-deductible to reduce my premium. Many affluent friends that I know that do not have an outstanding mortgage are deciding to ‘go naked’ without coverage. One guy I know with a custom, multi-million dollar house was quoted $32K. OUCH!
32K for a multi-million dollar home isn’t out of the ordinary.
I live in Palm Beach county and for a home insured close to 1 million I’m paying 12K and thankful I got it because some quotes were over 20K (and no, I do not have flood insurance nor am I required to have it).
What about liability? Are your friends who are going without coverage going entirely without? No liability insurance is a huge risk; potentially much worse than replacing a building
Here is an interesting point of view. When insurance companies are unwilling to insure because the risk is too high, then either government will step in (a growing trend) or we will be uninsured.
https://www.cnbc.com/amp/2025/08/08/climate-insurers-are-worried-the-world-could-soon-become-uninsurable-.html
I would lean more toward uninsured in the long run.
Statistically most people are the very low end of the why should we care scale.
While cities are an issue the true problem hits rural areas much more space and properties that sit there and no one actually cares about until rich folk move in.
Lose your home in a city and someone else can move n or one of the investment corps can buy it to turn into apartments.
Rural areas don’t have that fall back.
Like the Farmaid days. All these rural folks were forced on welfare because jobs were 500 miles away from family and friends and homes.
” I’m not a free man, I’m a NUMBER!”
We’ll never go to uninsured. You can’t buy a home without insurance. Political pressure will force government insurance.
You can if you pay cash.
I didn’t state that but it was presumed in my statement. Anyone who owns outright can do whatever they want in terms of insurance.
You can’t get a mortgage without insurance.
you can do a deed transfer for a dollar and fees.
When my BL was purchasing a rural home in the early 2000’s the seller wanted under 10k payments to avoid the tax reporting.
BL did not do that.
And someone with a mortgage can not sell the house without the insurance.
Thus Amish use their own banking and generational wealth to purchase community land.
I live near the Seneca’s and they reclaimed a town about a decade ago. Now you lease the land. Other area is Lillydale a Spiritualist church owned community and you lease the land there too. They also own Cassadaga Fla.
I’m not certain what South Dakota does since it was returned to the Sioux.
But if you find someone with paid off house or land, nor mortgage, you can get the property for an under the table bag of cash and legal dollar sale.
It used to be common practice for beater car sales, the sales slip was way lower than the original price to avoid taxes and fees.
I understand the reasoning on cars (avoiding taxes or attempting to avoid them).
But what’s the point on homes? Aren’t real estate title transfer fees fixed (ie don’t depend on price paid) and I don’t know anywhere that has sales tax on home sales.
But government insurance will have high deductibles and doesn’t usually cover the actual cost of rebuilding in the event of need due to some catastrophe.
Many states are already there. California and Florida I know for sure have Government insurance of last resort if you are unable to get coverage.
In Florida it’s limited to homes < 500K in value (1 million in Miami/Dade and Broward counties) which sounds like a lot but really means only low end homes qualify. There is a push to increase to 1 million everywhere in the state.
And that will work out as well as medicare and social security have over the long run. Let me guess, poor old granny can’t make the insurance payments so they’ll be a heavily subsidized rate for anyone over 65 which means everyone under 65 will have to pay more to cover the difference.
And people wonder why the young aren’t having kids and we’re in a demographic death spiral here in the US.
Just wait till we have a couple of Cat 5 hurricanes barrel through again and watch the insurance companies go bankrupt. Coming soon to a state near you.
It’s not for Granny. It’s for homes <500K in value. In theory Grannies house is much higher in value than that since she presumably has prime location real estate (near water or other desirable locations).
If a whole bunch of these type disasters (along with wild fires/earthquakes etc) end up happening then insurance will end up being 100% government backed (tax payer backed). There’s no way around it regardless of whether or not we like it.
Incidentally MORE people won’t solve this issue. In fact it only makes it worse since more people will be in the path of these disasters.