I. Introduction
The very real problem facing an increasing number of American households is that the homeowners insurance that they are required to maintain is becoming more expensive each year. 71% of surveyed homeowners agreed that their home insurance costs have increased in the last few years.
From a Pew Research Center survey of over 3,500 adults, approximately one third of them homeowners, it’s clear that insurance price increases have a real impact on a majority group of the U.S. homeowners polled.
Note that the higher-income segments of the population appear to report this type of increase at a significantly higher rate (80% of that demographic reported increases, over the 54% of lower-income survey respondents who reported the same.) Observers of these responses should also take into account the fact that lower-income households are more likely to be without homeowners insurance, or to ‘make do’ with an add-on product or endorsement as coverage for their home. These solutions likely aren’t providing the level of coverage needed, but are a form of compromise that some homeowners must accept.
II. The big picture: What’s driving these changes?
Extreme weather shifts continue to increase in pace, and show no sign of ceasing. These changes drive more frequent and more severe weather, including severe convective storms that bring high winds, hail, tornadoes, and other damaging events.
A challenging builder’s market exists because of global inflation, increased scarcity of needed building materials, and skilled labor shortages across the United States.
The reinsurers–the market that prices insurance for your insurance company–have to find ways to absorb some of the expense caused by these and other factors. Their appetite for absorbing risk or their need to offload surplus risk
In addition to the reinsurance layer that must be accounted for, the insurance providers writing policies must also maintain a certain level of profitability. Over 65% of the homeowners surveyed see insurance company greed as the main driver of home insurance price increases. This counterpoint of views that directly contradicts the industry company line that positions climate change as the only driver of prices worth mentioning.
Also worth noting when considering insurance company practices is the shift from historical to predictive underwriting. This change, paired with the adoption of drone usage for unannounced property assessments has moved the industry deeper into the practice of assigning ‘risk scores’ to properties. This change in approach is seen by some as writing policies that reflect “what insurance experts and consultants think might happen going forward, as opposed to actually what has happened.”
III. The property- and policyholder-level factors involved
How you and your property are seen and assessed by insurance agents and agencies is driven by a number of distinct factors that can be recorded and mapped to your profile along with the demographic basics that are already known.
The physical location of a property brings with it local risks. These could include weather exposure, distance from safety amenities like fire stations or hydrants, localized crime rates, and the frequency at which claims are made in the area.
The style of construction used for a home, the quality of materials used, and the age of every part involved must all be considered when evaluating the risk of insuring any home or other structure. Changes in the type of coverage available will become a factor after the home reaches a certain age. Homes under 10 years old can generally retain Replacement Cost coverage, that being a policy that provides a payout equal to the full cost to replace or repair the home at current day prices.
Homes that have passed the ten-year threshold can still obtain full insurance coverage, but this agreement often comes with caveats. Upgrades such as code-related upgrades may be required. Stipulations of this type should be made clear to the consumer early enough for repair arrangements to be made before a higher priced renewal bill is due.
The limits that any home or personal insurance policies are written for will obviously affect the premium price, and sometimes the deductible price as well. Beyond the policy limit, the most significant deciding factor will often be the difference between ACV and RCV coverage.
Actual Cash Value - This level of coverage provides the policyholder with a payout equal to the ‘actual’ or depreciated value of the home (or part, such as the roof). The calculation of ACT takes into account the age, materials, and level of wear of the structure.
Replacement Cost Value - RCV is the coverage that generally comes with a new home or a new roof. Replacement cost means that a claim and payout would provide the full amount needed to replace or repair the damaged structure at current day prices.
RCV coverage is significantly more expensive, but is also sometimes required by mortgage lenders looking to ensure the coverage of the home they are lending against. The frequency of required RCV coverage in a given area can affect local insurance cost averages, as well.
Every property has an attached insurance history in the CLUE Report. Because of this persistent history, even claims from a previous owner can impact the current owner’s insurance bill. The magnitude and cause of claims made on a policy have an impact as well. A preventable claim, such as water damage caused by a leaky pipe, leaves a bigger mark on the policyholder’s insurance history record than damage from an unpreventable act of nature.
The claims recorded in an individual’s CLUE Report stay on that record for up to seven years, although they have the greatest impact on the individual’s insurability and expenses for the first five years after the claim is made.
- Insurance history/score - The CLUE Report and its insurance history is different from a person’s credit history, but these two sets of data can impact one another. In some cases from a national survey, homeowners with low credit scores have been billed nearly $2,000 more per year than their same-demographic neighbors with higher credit scores. This kind of ‘credit penalty’ is banned in California, Maryland, and Massachusetts.
- Liability and litigation costs - Liabilities can stack up for homeowners with certain attractive-to-risk amenities around their homes. These features, like pools and trampolines, add opportunities for liability and thus increase the homeowner’s liability limit. The rise in the costs associated with defending liability claims means that these items generally result in higher rates for the owners.
IV. Regional differences and insurers leaving markets
You may be frustrated by the wide range of insurance prices seen across the country, but in a landscape as diverse as the United States, these variances will always have an impact on pricing of many goods and services for the foreseeable future.
There are more extreme cases worth highlighting. Minnesota, for example, saw the largest increase in premium cost of any state in 2025 with a +34% jump. Significant changes are not limited to the Midwest. California premiums are up over 42% since 2009, thanks in large part to the growing risk of fire.
The withdrawal of some insurers from higher-risk areas further impacts pricing, as the removal of a major competitor means less competition for those who remain, leading to higher premium prices for the consumer–the same people who may now also find it more difficult to obtain insurance coverage in the first place.
Finally, in addition to withholding coverage to entire regions or even states, numerous carriers also make widespread use of ‘nonrenewing’ customer policies after a claim is made or when local risk levels reach a level they are no longer comfortable with. Recent history shows nonrenewal rates running up to 80% higher in the highest-risk ZIP codes.
If trends like this continue apace, the U.S. could find itself in a condition described as likely by former U.S. Fed Chairman Jerome Powell who noted that in 10-15 years, we may see regions as a whole becoming unmortgageable, meaning that no bank would offer a loan to cover a home purchase in the affected areas.
V. The policy response to rising insurance costs
There is enthusiasm for changes that would ease the situation for American homeowners. Leading the charge is U.S. Senator Tina Smith’s, whose June 2026 report, Bold Solutions to the Home Insurance Crisis, presents policy solutions divided into three categories:
Risk Reduction, including financial support for structural upgrades that would actively protect the homes from the impact of severe weather. This initiative would also include efforts to encourage state and local governments to update building codes to reflect a more proactive approach to hardening homes. A final element would be the inclusion of efforts to stabilize local government borrowing through the use of municipal bonds.
Risk Transparency proposals include several methods for making plain to homeowners the risk information that is already available. This would include standardization efforts around how risk monitoring data is presented, shared, and distributed by insurance professionals. This proposal would also include provisions that coverage, cost, and cancellation trend records, especially those regarding low-income communities, are made available, and that climate change risks are dutifully considered during regulatory decisions.
Risk Transfer proposes the shifting of risk away from households through the use of public alternatives to private market disaster insurance coverage. Ideas in this group would include proposals such as national disaster insurance and federally backed disaster reinsurance. These transfers would require elevated levels of federal government involvement and would likely incite the most visible opposition to the traditionally state-by-state insurance landscape.
A noteworthy observation regarding the variance in risk among the states is that the less regulated states sometimes partially bear the weight of losses experienced by the more highly regulated ones.
VI. What homeowners can do to control insurance costs
Although the rising costs and risk levels are unavoidable, there are actions that every home insurance policyholder can take to minimize their impact and prepare for their future as homeowners.
- Shop and compare to every 2-3 years - Insurance carriers and agents use proprietary pricing formulae that result in a wide variety of quotes. Taking the time to solicit prices from more than one option periodically can reveal surprising savings that may be available to you.
- Raise your deductible responsibly - Accepting a higher deductible can bring down your premium costs, as these two costs generally exist in a balance. The raised deductible solution can be a useful tool, but policyholders pursuing this course of action should be realistic about their ability to cover the higher cost that would come with making a claim. The addition of a supplemental policy to offer deductible assistance can be a helpful addition in this case.
- Bundle home and auto - If this is an option that fits your needs, consider it. New customers who bundle home and auto insurance policies have been reported to save more than 25%, on average.
- Install protective/safety devices and harden the home - Evaluate your home for update opportunities that can make you eligible for discounts. Ask your agent about which discounts they offer before any work is done. Examples could include: storm shutters, water shut-off or leak sensors, alarm systems.
- Avoid filing small claims - Consider the potential impact on future insurance pricing before making any claim on your policy. Claims recorded on your CLUE Report are most likely to cause price increases for the first five years following the event. If the cost of the repairs is less than or approximately equal to the deductible, you are likely better off covering the repair bill yourself.
- Improve your credit where that’s an option - Be mindful of your credit score before pursuing a change in insurance. While some states prohibit credit evaluation as a driver of insurance pricing, 43 states do currently allow it, and a higher credit score will get you lower premium costs. If there are steps you can take to improve your credit score before an insurance renewal is due or before you shop for a new policy, plan to take them as soon as possible.
- Review coverage and understand escrow - Take the time to familiarize yourself with the role that escrow plays in insurance pricing. Payments paid through escrow still lead to a higher monthly mortgage payment, even if the individual costs are not as clearly listed.
VII. Conclusion
In short, this issue comes down to affordability and access to housing, and the issue is driven by home value shifts, local tax codes, and the ‘state of the mortgage’ in the US ten years from now.
The strategy outlined above can help you find points of compromise and savings, but long-term, the real change will hinge on climate, where construction costs go from here, and the outcome of current policy debates in D.C.
Gray is the Senior Content Specialist at Sola Insurance, working with the Sales and Marketing teams to provide helpful, valuable content for homeowners and agents. Gray has worked previously in finance, logistics, and advertising.
