Home Insurance Premiums Expected to Exceed $3,000 This Year
If you’re already struggling with the high cost of homeowners insurance, we’ve got bad news: Premiums will go up significantly this year.
A new report from insurance marketplace Insurify projects homeowners will see a 4% increase in premiums by the end of 2026, bringing average annual costs from $2,948 to $3,057 — with some states seeing even bigger jumps. This is the fifth consecutive year of premium increases: As of 2021, insurance costs have risen 46%, three times faster than inflation over the same period.
Matt Brannon, chief economist at Insurify, says the key reasons for the rapid increase are the increased intensity and frequency of extreme weather events, and the high cost of building houses.
“Strong storms, bringing strong winds, hail and even tornadoes, are causing more destruction than in previous years,” Brannon told Money in an email. “These events lead to insurance losses, and often respond by demanding higher premiums.”
Severe weather has caused nearly $3 trillion in damage across the United States since 1980, with most losses resulting from floods, hurricanes, heavy snow, tornadoes and wildfires. According to Brannon, costs related to weather events in the US are now estimated at $150 billion annually, more than double the $63 billion that occurred 10 years ago. By 2025, fires in Los Angeles County alone resulted in $62 billion in insured losses.
But higher premiums are just one factor in how homeowners insurance costs are changing. In the report, Insurify points out that insurers operating in states with an increased risk of severe weather tend to structure their policies so that homeowners bear a larger portion of the repair costs.
In states where hurricanes and tropical storms are common, for example, insurance providers may set a deductible as high as 5% of the policy’s coverage amount, resulting in thousands of dollars in out-of-pocket costs for homeowners. More than half of the premiums in Colorado are reserved for potential hail damage, while homeowners in “Tornado Alley” – the part of the US, usually in the Southern Plains, where there is a high risk of tornadoes – may have to pay a percentage of their policy’s coverage as a separate wind or hail deductible.
Countries most at risk of experiencing a damaging storm, whether from wind, rain or fire, are the most likely to already have the highest premiums. Those higher premiums aren’t limited to states that experienced a major hurricane, either. Every time a major disaster strikes, insurance costs also rise in states not directly affected by the event.
As roofing costs continue to rise, many homeowners are looking for ways to save. Others will seek to reduce costs by increasing deductibles. Others make the even more risky choice of skipping insurance, if circumstances warrant.
All mortgage lenders, for example, require homeowners insurance to approve a loan, so lowering coverage isn’t an option for those who don’t own their property outright. Homeowners associations and condo bylaws often require home insurance.
On the bright side, Brannon says, insurers often offer discounts to homeowners who take steps to reduce their home’s risk exposure, such as improving weatherproofing. Insurers will also offer lower rates for signing up for automatic payments and paperless payments, or bundling several policies together.
States where homeowners insurance premiums are expected to rise the most in 2026
The increasing intensity of severe weather and the rising costs of repairing or replacing damaged buildings are likely to cause more economic pain for American homeowners this year. Insurance premiums are expected to rise again, with these states seeing the biggest increases:
- California: 16% increase (+$388 on average)
- Nebraska: 13% increase (+$532)
- In New Mexico: 11% increase (+$246)
- Georgia: 10% increase (+$288)
- South Carolina: 9% increase (+$278)
- Arkansas: 7% increase (+$216)
- Missouri: 7% increase (+$209)
- In Oregon: 6% increase (+$86)
- In Oklahoma: 5% increase (+$243)
- Illinois: 5% increase (+$179)
More from Mali:
The Unexpected Factor That Could Drive Up Your Homeowners Insurance Rates
What Types of Storm Damage Are – and Are Not – Covered by Your Homeowners Insurance
12 Things That Can Increase Your Homeowners Insurance Premium
