The Unexpected Factor That Could Be Driving Up Your Homeowners Insurance Rates

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The Unexpected Factor That Could Be Driving Up Your Homeowners Insurance Rates By: Martha C. White Martha C. White Writer | Joined March 2026 Has also written: Switching Jobs Doesn't Pay Off Like It Used To It's Only March, but Millionaires Have Already Stopped Paying Into Social Security for the Year When Can You Start Filing Taxes? Warren Buffett's Successor Is Praising These 4 'Forever Stocks' Parents Can Now Sign Up for Trump Accounts When Filing Taxes. Here's How See full bio Editor: Katherine Peach Katherine Peach Associate Editor | Joined January 2025 Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. Has also written: Stamp Prices Won't Rise This Month, but These USPS Shipping Costs Will Debit Card Fraud Is on the Rise. Here's What I Did When It Happened to Me New Bill Aims to 'Actually' End Taxes on Social Security Inflation's Silver Lining: The Social Security COLA Estimate for 2026 Is Up Social Security Recipients Are on Track for a 2.5% Raise Next Year See full bio Published: Mar 13, 2026 8:30 a.m. EST 5 min read Money; Getty Images You probably already know that having a low credit score means paying a higher interest rate when you buy or refinance a home. But a new working paper from the National Bureau of Economic Research, or NBER, found that there’s a second category of housing expenses that are influenced by your credit score: homeowners insurance premiums. According to the researchers, "A low credit score increases premiums roughly as much as it raises mortgage rates." The paper's authors analyzed data from a natural experiment that occurred when Washington state temporarily banned insurers from using credit data in setting home insurance rates. They wrote that their study "suggest[ed] that lower-credit borrowers pay more for reasons other than physical risk exposure." Ads by Money. We may be compensated if you click this ad.AdPowered byYou Could Be Saving On Homeowners InsuranceAnswer a few quick questions to check which company fits your insurance needs. Enter Your ZIP Code to Get Started.Zip CodeNextBy clicking “Next”, I agree to Money’s Terms of Use and Privacy Notice, and consent to the processing of my personal information. I understand that Money may receive compensation from its partners after I submit my information. Partner Disclaimers & DisclosuresYou Could Be Saving On Homeowners InsuranceAnswer a few quick questions to check which company fits your insurance needs. Enter Your ZIP Code to Get Started.Zip CodeNextBy clicking “Next”, I agree to Money’s Terms of Use and Privacy Notice, and consent to the processing of my personal information. I understand that Money may receive compensation from its partners after I submit my information. Partner Disclaimers & Disclosures {{{title}}} {{{list}}}{{{disclaimer}}} Back Here are the top homeowners insurance companies based off your selectionClick below to begin the quote process:{{{top10_widget}}}Start OverWe're sorryNo exclusive offers are available for your areaStart OverEmail me my resultsIf you're finding this valuable, why not take it a step further? Sign up now to receive expert tips, personalized advice, and the latest updates on personal finance directly to your inbox.Yes! Sign me UpNo Thanks, Continue to my matchBackBy clicking "Yes!

Sign Me Up", I agree to receive newsletters and promotions from Money and its partners. I also agree to Money's Terms of Use and Privacy Notice and consent to the processing of my personal information. What's more, this poor-credit penalty is significant: Your credit has as much of an impact on your homeowners insurance premium as whether or not you live in a disaster-prone area. It’s not entirely surprising that credit scores influence home insurance rates. Except for a handful of states that restrict the use of credit reports in insurance underwriting, most insurance companies do use that information. People with lower credit scores are more likely to file claims after sustaining damages, possibly because they have less ability to borrow money to pay for home repairs. "Filing a claim may be the cheapest, if not the only way, to cover immediate unavoidable expenses," the paper noted. But the extent of the correlation between lower credit scores and higher premiums took researchers by surprise. They found that insurance companies charge people with poor credit 24% more for the exact same insurance coverage as people with excellent scores. Insurance premiums are rising for all — but not equally Homeowners around the nation have endured year after year of eye-watering rate hikes. But the pain has been more acute for those with bad credit. What's more, this financial pressure has been getting worse over the past decade. Data from ICE Mortgage Technology found that annual homeowners insurance premiums are up $149, or nearly 7%, from a year ago. Ironically, this is relatively good news, in that it’s a smaller hike than the double-digit increases homeowners endured for the last three consecutive years. Overall, premiums have gone up by almost 70% in the last five years alone. The average homeowner now pays roughly $200 a month, or roughly $2,400 a year. Although it’s well-known that homeowners in some locations pay much more, NBER determined that credit is as much a factor as location, and that rates for homeowners with poor credit have risenfaster than rates for those with good credit. Researchers found that insurance accounts for a rising share of homeowners’ total housing costs. This “insurance burden,” as the paper termed it, rose across the board from 12% in 2020 to 15% in 2024. For homeowners with low credit scores, though, that share rose faster, and to a greater degree. It jumped from 17% to 24% over the same time period. Homeowners in the bottom 20% of the credit spectrum paid, on average, $550 more a year than the 20% of homeowners with the highest scores. And those increases are increasingly wreaking havoc on homeowners’ budgets. As the NBER paper noted, while most homeowners have fixed-rate mortgage payments that don’t change from year to year, annual insurance policy renewals force homeowners to face sticker shock — and juggle their budgets accordingly — on a recurring basis. Because most insurance companies today use credit scores in their underwriting, homeowners who want to lower their premiums should take steps to improve their credit and comparison-shop for the best home insurance rates after raising their scores. Ads by Money. We may be compensated if you click this ad.AdNeed to insure your home or looking to lower your rate?Click below to see if you can save.View Rates More from Money: 10 Home Upgrades That Can Lower Your Insurance Bill Homeowners Are Increasing Insurance Deductibles to $5,000 or More to Save Money Sticker Shock: Homeowners Fed Up With Higher Insurance Rates and Slower Claims SHOWHIDEAds by Money. We may be compensated if you click this ad.AdFind the Home Insurance policy that meets your needsView Rates