September 2026 · 4 min read
Most homeowners never write a check to their insurance company. The premium is folded into the mortgage payment, the servicer pays the bill, and the policy renews on its own. It is convenient. It is also the easiest way to stop paying attention to what may be one of your largest household bills.
Roughly 80% of mortgage holders nationally have an escrow account, which collects money every month for property taxes and insurance and pays those bills when they are due. Lenders require escrow for conventional borrowers with 20% equity or less, and every FHA borrower has one for the life of the loan.
The catch is that the insurance premium never shows up as its own bill. It arrives as a slightly higher mortgage payment, once a year, after your servicer's escrow analysis. Many people notice the payment went up and assume it is taxes.
It has been going up, a lot. A study by mortgage servicer Newrez, drawing on about 1.2 million loans, found the average annual homeowners premium rose 64% between the end of 2021 and the end of 2025, from roughly $1,597 to $2,625.
Almost half of U.S. homeowners insurance customers saw a premium increase in the past year, the highest rate of insurer-initiated increases in more than a decade, according to J.D. Power. Cotality, formerly CoreLogic, reports that insurance now makes up 9% of the typical homeowner's payment, the highest share on record, and expects premiums to rise another 8% in 2026 and another 8% in 2027.
At the same time, fewer homeowners understand how the system works. In LERETA's annual escrow survey, only 60% of homeowners said they fully understand how an escrow account works, down from nearly 80% the year before, and 68% had seen their monthly mortgage payment rise over two years because of taxes and insurance. Rising prices plus less attention is how people end up paying more every year for a policy nobody has read since closing.
You can. Shopping for a new homeowners policy has no impact on your escrow account, and escrow does not make insurance cheaper or more expensive.
If you change insurers, the new company lists your lender on the policy and sends proof of coverage to your servicer, which pays the new premium from escrow going forward. Your old insurer refunds any unused premium; depending on your servicer, that refund comes back to you or goes into the escrow account. Your agent handles the paperwork. The best time to do this is before renewal, not after.
A policy that renews on autopilot can drift out of date on coverage, not just cost. Rebuilding costs have climbed: Verisk reports U.S. residential reconstruction costs rose 5.2% between April 2024 and April 2025, after a 4.6% increase the year before. If your dwelling limit was set years ago and never revisited, it may not match what it would cost to rebuild today. When you look at your policy this year, check five things.
The premium. Find it on your declarations page or escrow statement and compare it with last year's.
Your dwelling limit (Coverage A). Is it based on what it would cost to rebuild today, not what you paid for the house?
Replacement cost or actual cash value. Replacement cost pays to rebuild or replace. Actual cash value subtracts depreciation. The difference matters at claim time.
Your liability limit. If you have, or should have, an umbrella policy, your home liability limit needs to meet what the umbrella requires underneath it.
Your deductible. A higher deductible can lower the premium, but only if you could comfortably pay it after a loss.
At The AI Insurance Group, the first review is free. Send us your current declarations page. Our AI reads every page, a licensed agent checks every finding, and we tell you what your policy covers, what it doesn't, and whether the price still matches the coverage. If there is a better fit among our carriers, we will show you. If your current policy is right, we will tell you that too.
Insurance should be reviewed, not simply renewed.
LERETA, Annual Escrow Awareness Survey (January 2025). Newrez premium study of about 1.2 million loans, as reported by PennyPincher. J.D. Power, 2025 U.S. Home Insurance Study. Cotality (formerly CoreLogic), as reported by Fast Company. Progressive, Escrow and home insurance. Verisk reconstruction cost data, as reported by the NW Insurance Council.
Sal Martorano is the founder of The AI Insurance Group, a licensed independent insurance agency in New Jersey, Pennsylvania and Florida. NJ Producer License No. 3004245927.