In a year when affordability has become the watchword, homeowners are facing another growing pressure point: sharply rising insurance costs.
Home insurance premiums are expected to increase by an average of 8% in 2026 and nearly 30% over the next 30 years, according to LexisNexis Risk Solutions, which recently released its 10th annualU.S. Home Trends Report.
The report examines loss costs, claims frequency and severity, as well as seasonal patterns, catastrophic events and geographic trends. Its conclusion is clear: the forces pushing insurance costs higher are becoming more persistent and more severe.
To be sure, this is not a new development. Home insurance costs have already increased about 66% since 2017 – more than double the pace of overall consumer inflation. Nearly half of U.S. homeowners saw their premiums rise in the past year alone, marking the highest rate of insurer-initiated increases in more than a decade.
Climate-related losses remain a primary driver. In 2024, the United States experienced 27 weather and climate disasters that each caused at least $1 billion in damage, about 21% above the long-term average. Catastrophe claims accounted for 42% of all home insurance claims, while catastrophe-related losses rose to 64% of total losses, a seven-year high.
Wind and hail losses have been particularly costly. Wind claim severity climbed 23.5%, while hail-related loss costs were nearly 19% above the seven-year average. Nearly two-thirds of hail claims were classified as catastrophic.
The takeaway for homeowners is sobering. Insurance, once viewed as a relatively stable cost of homeownership, is increasingly shaped by forces that individual households cannot fully control, particularly climate risk.
“Rising premiums are no longer just a nuisance expense,” said Thomas Ravert, a certified financial planner with Pathway Capital Corp. Home insurance, he said, is becoming “a structural cost of homeownership that must be actively managed, much like property taxes or a mortgage payment.”
So how can homeowners respond?
As premiums rise sharply, financial planners say homeowners still have levers they can pull – but only if they treat insurance as an active financial decision, not a passive bill.
Photo by Virojt Changyencham on Getty Images
Location risk comes first in home insurance
In real estate, the old rule has always been location, location, location. The same principle now applies to home insurance, where geography increasingly determines not just price, but availability.
“The single biggest driver of home insurance costs is location,” said Meaghan Dowd, director of insurance at Holistiplan. That factor, she said, will increasingly determine whether homeowners experience modest increases or far more dramatic spikes.
Florida is a prime example. While the state is attractive from a tax perspective, Dowd said it “may not be ideal if affordable insurance is a priority.”
Some metropolitan areas in Florida are projected to see premium increases of more than 200%. Based on Bankrate data, the average annual premium for a $300,000 dwelling in Florida is currently $5,838. A 200% increase would push that figure to more than $17,500 a year.
Florida is not alone. Bankrate data show that Nebraska ($6,587 per year) and Louisiana ($6,724 per year) rank among the most expensive states for homeowners’ insurance, while Vermont ($827 per year), Delaware ($966 per year), and Alaska ($1,035) are among the least expensive.
(As an aside, my homeowner’s insurance premium in Massachusetts is now $8,462 per year, up from $4,804 in 2019. That works out to a 76% increase vs. a 27% increase in overall consumer prices over the same span. On an annual basis, my premium increases work out to roughly 10% per year on a compounded basis, while overall consumer prices rose about 3.5% per year, over the same span.)
As climate risk becomes more localized and insurers price that risk more aggressively, where a home is located is increasingly central to what it costs to insure – and whether coverage is readily available at all.
Insure replacement cost, not market value
Many homeowners misunderstand what they are actually insuring and base coverage on a home’s market value rather than its replacement cost, said Marc Kadomatsu, a certified financial planner with Human Investing. That mistake can inflate premiums without providing meaningful additional protection.
“Insurance is there to rebuild the home, not buy it,” said Josh Brooks, a certified financial planner with Exponential Advisors.
Brooks added that homeowners should “make sure they aren’t paying to insure land that doesn’t burn,” a common oversight in areas where property values have risen faster than construction costs.
Ravert said many homeowners also overinsure cosmetic upgrades while underinsuring core structural components – a mismatch that raises premiums without materially reducing risk. Coverage decisions, advisers say, should focus on the structure itself and core systems such as the roof, electrical wiring and plumbing.
Stop filing small or “nuisance” claims
A homeowner’s claims history can affect both pricing and insurability for years, advisers say, making restraint critical when deciding whether to file a claim.
“Stop filing ‘nuisance’ claims,” Brooks said. “This is not small claims court.”
Filing minor claims damages a homeowner’s claims record and signals higher risk to insurers, Brooks said. Insurance should be reserved for catastrophic losses – such as fires, major water damage or severe storms – not routine repairs.
Avoiding claims matters for reasons beyond premiums alone, Dowd said. Claims can affect pricing for several years and often create significant disruption to family life, work and day-to-day routines.
The practical takeaway: insurance is protection against financial ruin, not a maintenance plan.
The home’s “bones” drive underwriting decisions
Insurers are increasingly focused on the underlying risk profile of a property, advisers say, placing greater weight on a home’s structural systems.
The type and age of a home’s wiring, plumbing and roof can significantly affect both insurance costs and insurability, Dowd said. Homes with outdated systems may be difficult or expensive to insure and, in some cases, may be declined by preferred carriers.
Roof age, in particular, has become one of the most important underwriting factors. As roofs get older, premiums typically rise, and coverage may be restricted or denied once a roof passes certain age thresholds, regardless of apparent condition.
Ravert said deferred maintenance in these core areas is increasingly likely to result in higher premiums or tighter coverage terms.
Maintenance is no longer optional
Deferring routine home maintenance has long been common. Increasingly, advisers say, that approach carries real insurance consequences.
Routine upkeep now affects insurance pricing directly, not just a home’s market value, Kadomatsu said. Insurers are far more granular in how they assess risk than they were even a decade ago.
Routine maintenance, Ravert said, is no longer just about preserving home value. It has become central to remaining insurable at a reasonable cost.
As a result, Dowd said, homeowners need to plan proactively for updates rather than rely on insurance as a substitute for ongoing maintenance.
Invest in risk-mitigation technology
Preventing losses reduces both premiums and disruption, advisers say.
Automatic water shut-off valves, leak-detection systems and electrical safety upgrades can reduce losses and qualify homeowners for discounts, Dowd said.
Proactive risk mitigation – such as replacing an aging roof, upgrading electrical panels or improving storm resistance – can materially reduce both premiums and the likelihood of catastrophic loss, Ravert said.
Revisit deductibles as savings grow
Many homeowners retain too little risk in their insurance policies, advisers say, paying higher premiums than necessary as a result.
Homeowners with a fully funded emergency fund should consider raising their deductible, Brooks said. Higher deductibles can materially reduce premiums over time and often tilt the math in the homeowner’s favor.
Ravert said many homeowners carry deductibles that are too low relative to their financial reserves, which unnecessarily inflates premiums. Deductible choices, Dowd said, should be reviewed alongside liquidity and emergency savings.
The trade-off is straightforward: higher deductibles shift more risk back to the homeowner, making adequate savings or reliable cash flow essential.
Shop carefully, not blindly
Lower premiums often come with trade-offs, advisers say, making it important to look beyond price alone.
Price shopping can be misleading because coverage details matter as much as the premium, Dowd said. Lower-cost policies may include reduced limits, higher deductibles or new exclusions that leave homeowners more exposed.
Switching carriers can also have unintended consequences. Changing insurers often triggers inspections or underwriting reviews that can result in coverage changes after a policy is issued.
At the same time, staying put indefinitely is rarely the answer. Loyalty is seldom rewarded in today’s insurance market, Kadomatsu said.
Homeowners should approach insurance shopping the way they shop for a mortgage – regularly and competitively – because rate increases often occur quietly over time, Ravert said.
Monitor your insurance score
Credit-based insurance scores are playing a larger role in pricing, particularly in preferred markets.
A strong insurance score can qualify homeowners for meaningful discounts, Dowd said. Because insurers weigh these scores differently, pricing can vary from one carrier to another.
That variation can matter even more when a home has more than one owner. Quoting policies under both names can sometimes produce different pricing, she said.
Availability is the new constraint
Coverage is no longer guaranteed, advisers say.
Insurers are more selective today than in the past, Dowd said, and some homeowners may need to accept non-admitted markets, higher deductibles or partial self-insurance.
Rising premiums, she said, often reflect the cost of being able to obtain coverage at all. Kadomatsu added that long-term insurability now needs to be factored into the true cost of owning a home.
Homeowners need to actively manage insurance
“Insurance is no longer passive,” Ravert said. Homeowners who combine regular upkeep, risk avoidance, smart coverage decisions and periodic policy reviews are far better positioned to control costs and protect their homes over time.
Home insurance, Kadomatsu said, is no longer a set-it-and-forget-it expense. For today’s homeowners, managing insurance is increasingly part of managing household risk itself.
