Homeowners insurance in 2026: why it's soaring, and what to do

Pairs with the affordability calculator

Homeowners insurance has gone from a line item nobody thought about to one of the most talked-about costs of owning a home. Average premiums have risen roughly 70% over the past five years, and forecasts point to further increases of around 8% in 2026. For a cost your mortgage requires you to carry, that's a real problem — and one worth understanding and actively managing rather than passively absorbing.

Why you can't skip it

As long as you have a mortgage, your lender requires you to keep homeowners (hazard) insurance on the property. The house is the lender's collateral; insurance protects that collateral from being wiped out by fire, storm, or other disaster. It's written into your loan agreement, and it's non-negotiable while the loan exists. So the question is never whether to carry it — it's how to carry it as efficiently as possible.

Why premiums are soaring

The increases aren't random or purely greed; they trace to a few structural forces:

• Climate-driven losses. More frequent and more severe storms, wildfires and floods mean insurers pay out more in claims. Insured losses from severe storms alone have topped tens of billions of dollars for several years running — well above historical averages.
• Reinsurance costs. Insurers buy their own insurance, called reinsurance, as a backstop. Reinsurance prices rose sharply from 2022 through 2024, and those costs flow straight through to your premium.
• Rebuild-cost inflation. Insurance pays to rebuild, and the cost of materials and labour has climbed. A policy has to cover today's construction costs, not what the house cost you.
• Underwriting losses. In 2023, insurers paid out more in claims than they took in on homeowners policies nationally — a loss-making business that had to reprice to survive.

Government analyses from the U.S. Treasury and the Government Accountability Office confirm the pattern: premiums are rising broadly, and rising most where disaster risk is greatest.

Why your neighbour pays half as much

Insurance has become intensely local. National averages hide enormous variation: premiums have risen only modestly in low-risk areas but dramatically along hurricane coasts and in wildfire zones. In the hardest-hit markets, some insurers have stopped writing new policies altogether, pushing homeowners to state insurers of last resort. Two similar houses a few hundred miles apart — or even in different parts of the same state — can face wildly different premiums based purely on catastrophe exposure. If you're shopping for a home, the insurance cost in a given area is now a real part of affordability, not a rounding error.

How it flows into your payment

For most borrowers, insurance is paid through the escrow account, bundled into the monthly mortgage payment. That has a direct consequence: when your premium rises, your mortgage payment rises with it, and you may also face an escrow shortage for the year the increase caught the account short.

The levers that actually lower it

You can't opt out, but you have more control than most people use:

• Shop it every year at renewal. This is the biggest lever. Loyalty is not rewarded in insurance; premiums drift up, and a competing quote often beats your renewal by a wide margin. Get several quotes annually.
• Raise your deductible. Moving from a $1,000 to a $2,500 or $5,000 deductible meaningfully cuts the premium. The trade-off: you shoulder more of a small claim yourself — which is fine if you have the emergency savings to cover it, and often wise anyway, since small claims can raise your rate.
• Harden the home. Wind and fire mitigation — a new roof, impact windows, defensible space, upgraded electrical — can earn discounts, sometimes large ones in high-risk areas. Ask your insurer exactly which improvements they credit.
• Bundle home and auto with one insurer for a multi-policy discount, and ask about every other discount (security systems, claims-free history, new-buyer).
• Right-size the coverage. Insure the rebuild cost, not the market price or the land. You're covering the structure, not the lot it sits on, so an accurate rebuild figure avoids over-insuring.

The one thing never to let happen

If your policy lapses — you missed a payment, or shopped and let the old one expire before the new one started — your lender will buy insurance for you and bill you for it. This force-placed (or lender-placed) insurance is far more expensive than a policy you'd choose, and it protects only the lender, not your belongings or liability. Letting coverage lapse is one of the most expensive mistakes in homeownership, and it can even count as a default on your loan.

So when you shop, make sure the new policy is in force before the old one ends, and keep your insurance current the way you keep your payment current. Insurance is one of the two bills — taxes being the other — that can put your home at risk even when the mortgage itself is paid on time.

Frequently asked questions

Mortgage Ledger publishes educational information, not personalized financial, legal, tax, lending, or investment advice. The figures here are estimates built on stated assumptions and will not match a lender’s underwriting exactly. Confirm any number that matters against your Loan Estimate and a licensed professional before you act on it.