SFA Research Corner: Warning: Rising Insurance Costs Could Undermine Your Financial Stability

Record-breaking natural disasters, like the Los Angeles wildfires, which are estimatedto cause $30 billion in insurance losses, are driving insurers to raise auto and homeowner insurance premiums nationwide and reduce coverage in high-risk areas. Rising home and auto insurance premiums, coupled with higher mortgage payments, are intensifying financial strain on households already grappling with inflation and rising costs of essentials like food, utilities, and healthcare. In 2024, home insurance costs climbed 25% in 2024 while auto insurance rose 9%, following double-digit increases in 2023. These escalating fixed costs are tightening household budgets, increasing delinquency risks across all income levels, and creating ripple effects in financial markets.