Home Insurance Rates: How Much Does Home Insurance Cost in 2026?

What Is Driving the Increases

Several forces are pushing premiums higher simultaneously. Understanding these factors will help you evaluate whether a rate increase on your policy is justified or whether it makes sense to shop around.

• Catastrophic weather losses. The Treasury FIO report identified three primary climate risks driving insurer costs: wildfires in the West, severe convective storms in the Midwest, and hurricanes along the East and Gulf coasts. Claims in the highest-risk ZIP codes averaged $24,000 per claim, compared to $19,000 in the lowest-risk areas.
• Replacement cost inflation. The Bureau of Labor Statistics Producer Price Index for homeowners’ insurance has tracked a 49% increase since 2019, with rising construction material costs and labor shortages as primary drivers. Even if your home has not changed, the cost to rebuild it has, and insurers price that into your premium.
• Reinsurance repricing. Insurers buy their own insurance, called reinsurance, to cover catastrophic losses. When reinsurers raise rates globally, those costs pass through to consumers. The Treasury FIO report noted that insurer costs were significantly higher in the highest-risk ZIP codes, where the paid loss ratio was steeper, and claims averaged $24,000 versus $19,000 in lower-risk areas.
• State regulatory lag. In prior-approval states like California and New Jersey, insurers must get rate increases approved by regulators before implementing them. This creates a backlog effect: when approvals finally come through, the increases can be steep. State Farm was approved for a 17% homeowners rate hike in California in May 2025 and subsequently filed for further increases.

Recent State-Level Rate Actions

State insurance departments approve or deny rate filings from carriers, and the 2025 filing data shows the scope of premium pressure across the country.

• California: State Farm, the state’s largest home insurer, received emergency approval for a 17% homeowners rate hike from the California Department of Insurance in May 2025 following the Los Angeles wildfires, with additional rate increase requests pending. The FAIR Plan, California’s last-resort insurer, imposed a $1 billion special assessment on insurance companies, which will be passed through to policyholders.
• Illinois: State Farm implemented a 27% average homeowners rate increase effective July 2025, with a new minimum 1% wind/hail deductible.
• New Jersey: Nearly half of the state’s 127 homeowners’ insurers filed for rate increases in 2025, with more than 50 already approved. The steepest approved increase was 23.6% (Founders Insurance).
• Florida: After years of double-digit annual increases, Florida is showing early signs of stabilization. The average annual premium is $3,815, up about 6% from the prior year, a significant slowdown. Regulators received 73 filings for rate decreases and 94 filings for 0% increases.
• North Carolina: The Rate Bureau proposed a 28.5% average increase for dwelling fire policies effective July 2026, with a second 30.9% increase proposed for July 2027.

Flood Insurance: A Separate and Rising Cost

Standard homeowners’ policies do not cover flood damage. If you live in a flood zone, or if your lender requires it, you will need a separate flood policy. The National Flood Insurance Program, administered by FEMA, is the primary source of flood coverage for most homeowners.

As of March 2025, the average annual NFIP premium was $898. Under FEMA’s Risk Rating 2.0 methodology, which became fully effective in April 2023, premiums are calculated based on property-specific factors including distance from water, flood frequency, foundation type, lowest floor height, and replacement cost. Annual increases are capped at 18% per year until a policy reaches its full-risk rate, though FEMA estimates that about one-third of policyholders are already paying their full-risk premium. The remaining two-thirds will see 18% annual increases for years to come. FEMA data shows that NFIP premiums under Risk Rating 2.0 are rising by over 100% on average across all policyholders, with increases of at least 50% in 41 states.

The NFIP currently owes the U.S. Treasury $22.5 billion from past catastrophic loss borrowing, and the program’s authorization lapsed for 43 days during the October-November 2025 government shutdown. If you purchase a home in a flood zone, factor this cost and its upward trajectory into your budget.

What to Look for When Shopping for Homeowners Insurance

With premiums rising across the board, the difference between a good policy and a bad one matters more than ever. Here is what to prioritize.

1. Understand What Your Policy Actually Covers

Most standard homeowners policies are HO-3 forms, which cover the structure of your home on an open-peril basis (everything is covered unless specifically excluded) and your personal property on a named-peril basis (only listed events are covered). Make sure you understand the exclusions. Flood, earthquake, sewer backup, and equipment breakdown are almost always excluded and require separate coverage or endorsements.

2. Check the Replacement Cost vs. Actual Cash Value

Replacement cost coverage pays to rebuild or replace damaged property at current prices. Actual cash value deducts depreciation, which can leave you tens of thousands of dollars short after a major claim. Always opt for replacement cost on both the dwelling and personal property, and look for policies that offer extended or guaranteed replacement cost for an extra layer of protection.

3. Look at the Insurer’s Financial Strength and Claims Record

An insurer’s AM Best rating tells you whether it has the financial reserves to pay claims after a major disaster. Look for carriers rated A or higher. Claims satisfaction data from J.D. Power and complaint ratios from the NAIC can tell you how the company treats policyholders when something goes wrong. A low premium means nothing if the company fights every claim.

4. Compare Discounts, but Do Not Let Them Drive Your Decision

Most carriers offer discounts for bundling home and auto, installing security systems, having a newer roof, and maintaining a claims-free history. These can meaningfully reduce your premium, but the base coverage quality and claims experience should come first. A 25% bundling discount on a bad policy is still a bad policy.

5. Review Your Deductible Options

Raising your deductible from $1,000 to $2,500 can lower your annual premium by 10% to 15%, but make sure you can afford the higher out-of-pocket cost if you need to file a claim. Some states and carriers are also introducing percentage-based deductibles for wind and hail damage, often 1% to 5% of your dwelling coverage amount, which can add up to thousands of dollars on a $400,000 home.

6. Get at Least Three Quotes

Premiums for the same coverage can vary by 40% or more between carriers in the same ZIP code. Get home insurance quotes from at least three insurers, including a direct writer (like State Farm home insurance or USAA home insurance), an independent agency that represents multiple carriers, and an online option (like Lemonade home insurance). Compare the coverages side by side, not just the price. Make sure the dwelling limits, deductibles, and endorsements match before drawing any conclusions.

The Bottom Line

Homeowners insurance is getting more expensive, and the data from the NAIC, Treasury, Census Bureau, and state insurance departments all point in the same direction. Premiums have outpaced inflation and income growth for several consecutive years, driven by catastrophic weather losses, higher replacement costs, and reinsurance repricing. Flood insurance adds another layer of cost that is also trending upward under FEMA’s Risk Rating 2.0.

None of this means you should skip coverage or cut corners on your policy. It means you should shop deliberately, compare at least three quotes, prioritize replacement cost and financial strength over the lowest premium, and revisit your coverage annually to make sure you are not overpaying for what you need or underinsured for what you have.