If you're a homeowner, you've probably felt the sting of rising insurance premiums over the past few years. The good news? 2026 brings the first glimmer of hope in what's been a brutal stretch for homeowners insurance. After years of double-digit rate hikes, the market is finally showing signs of stabilization. Premiums are still going up—let's be clear about that—but the pace has slowed considerably. Here's what you need to know about home insurance in 2026 and what it means for your wallet.
The Market Is Stabilizing (Finally)
The biggest news for 2026 is that AM Best, the credit rating agency that evaluates insurance companies, has revised its outlook on the U.S. homeowners insurance sector from Negative to Stable. That might sound like industry jargon, but it's actually a big deal for you. It means insurers are regaining their financial footing after years of losses driven by catastrophic weather events and soaring claims costs.
What does this mean in practical terms? Premium increases are cooling off. The average new policy premium hit $1,952 in late 2025, representing an 8.5% year-over-year increase. That's still a jump, but it's a far cry from the 18% spike between 2023 and 2024. Several factors are driving this moderation: carriers finally achieved rate adequacy after years of delayed approvals, inflation is slowing, and technology is helping insurers better assess and price risk. Plus, the 2025 hurricane season gave everyone a break—more on that shortly.
But let's not pop the champagne just yet. While the rate of increase is slowing, premiums remain at historic highs. Over the past three years, homeowners have seen their insurance costs rise by an average of 24%. And if you're in states like Utah, Illinois, Arizona, or Pennsylvania, you've been hit even harder, with increases ranging from 44% to 59%. So yes, things are getting better, but 'better' is relative when costs are still sky-high.
A Quiet Hurricane Season Provided Much-Needed Relief
One of the most surprising developments of 2025 was the Atlantic hurricane season. Despite forecasts predicting above-average activity, the U.S. dodged a major bullet: 2025 was the first hurricane season in a decade without a major hurricane making landfall on U.S. soil. While 13 named storms formed (slightly below the 30-year average of 14), only Tropical Storm Chantal touched down in the Carolinas, causing limited damage.
This quiet season was a huge win for the insurance industry and, by extension, for you. Fewer catastrophic claims meant insurers could stabilize their reserves and avoid the massive payouts that have driven rate increases in recent years. To put it in perspective, the Los Angeles wildfires accounted for about 51% of total U.S. insurance industry losses in 2025. Without that single event, 2025 would have been an exceptionally low-loss year for the industry.
Of course, one calm season doesn't erase the reality of climate change. Insurers know that severe weather events are becoming more frequent and more costly. But the respite gave the industry breathing room to recalibrate pricing and underwriting strategies without the immediate pressure of billion-dollar hurricane losses.
Your Deductible Is Going Up (and That's by Design)
Here's a trend you've probably noticed when renewing your policy: deductibles are climbing fast. The average deductible rose 22% in 2025, compared to 15% the previous year. Even more significant is the shift in how deductibles are structured. Insurers are moving away from flat-dollar deductibles (like $1,000 or $2,500) and toward percentage-based deductibles tied to your home's insured value.
What does that mean? If your home is insured for $400,000 and you have a 2% deductible, you'll pay the first $8,000 of any claim out of pocket. Many policies now include separate percentage-based deductibles for wind and hail damage—often ranging from 1% to 5% of the home's value. This is especially common in high-risk states like Florida and Texas, where hurricanes and severe storms are frequent.
The adoption of percentage-based deductibles surged 63% in 2025, and policies with deductibles under $1,000 now represent less than 5% of new policies—a 56% year-over-year decline. Why the shift? Insurers are transferring more risk to policyholders to manage their own exposure, particularly as property values and repair costs have skyrocketed. It's a way for them to keep premiums somewhat in check while ensuring they're not on the hook for every minor claim.
Insurance Is Now a Major Part of Your Mortgage Payment
If you're like most homeowners, your insurance premium is bundled into your monthly mortgage payment through an escrow account. And if it feels like that payment keeps creeping up, you're not imagining it. Home insurance now accounts for approximately 9% of the typical mortgage payment, making it a significant factor in overall housing affordability.
The average U.S. homeowner is now paying around $3,520 annually for home insurance—that's about $293 per month. In high-risk states, it's even more. Louisiana homeowners, for instance, are projected to see premiums rise 28% in 2026, pushing annual costs well above the national average. This matters because rising insurance costs can strain household budgets and even affect your ability to refinance or qualify for a new mortgage.
What You Can Do About Rising Costs
Okay, so insurance costs are still high and likely to stay that way. What can you actually do about it? First, shop around. Rates vary significantly between carriers, and loyalty doesn't always pay. Get quotes from at least three insurers every year or two to make sure you're not overpaying. Second, ask about discounts. Many insurers offer breaks for bundling home and auto policies, installing security systems, having a newer roof, or making your home more disaster-resistant.
Consider raising your deductible if you can afford to cover more out of pocket in the event of a claim. A higher deductible typically lowers your premium. Just make sure you have enough savings set aside to cover that deductible if disaster strikes. And finally, review your coverage limits annually. If you're overinsured, you're paying for more protection than you need. If you're underinsured, you could be left with massive out-of-pocket costs after a claim.
Looking Ahead: What to Expect in 2026 and Beyond
The outlook for 2026 is cautiously optimistic. Premiums are expected to rise another 8%, which is manageable compared to what we've seen in recent years. Insurers are becoming more selective about where they write policies, particularly in high-risk coastal and wildfire-prone areas, but overall availability is improving as carriers regain profitability. Technology like AI-driven risk assessment and satellite imagery is helping insurers price policies more accurately, which should lead to more stable rates over time.
That said, climate change isn't going anywhere. Future hurricane seasons could easily reverse the gains made in 2025. Wildfire risk continues to escalate in the West. And inflation, while slowing, still means repair and rebuilding costs are higher than ever. The bottom line: high home insurance costs are the new normal. But with the market stabilizing and insurers on firmer financial ground, at least the worst of the chaos may be behind us. Stay informed, shop smart, and don't be afraid to advocate for yourself when it's time to renew.
