The Home Insurance Affordability Crisis: What to Do When Coverage Is Too Expensive

The Growing Affordability Crisis

Home insurance used to be a modest, predictable line item on the household budget. That's no longer the case. A report from the Consumer Federation of America indicated that insurance premiums soared by an average of $648, or 24%, reaching $3,303 annually from 2021 to 2024. Additionally, the U.S. Treasury Department noted that from 2018 to 2022, average premium increases outpaced inflation by 8.7%. For millions of homeowners, the math simply isn't working anymore.

The 2026 data tells a sobering story. 47% of homeowners would struggle to pay their mortgage if premiums rose. And 74% said homeowners insurance is a significant portion of their housing budget. Premium pressure is widespread: a recent survey conducted by the Pew Research Center revealed that approximately 71% of homeowners reported an increase in their insurance costs over recent years, with 42% indicating that the hikes have been substantial. The Dallas Fed reports that insurance premiums nationally rose about 70% from 2019 to 2025, and the share of the average monthly mortgage payment going to insurance has climbed from 10% in 2013 to 14% in 2025.

The causes are well-documented: increasingly severe climate events, soaring construction and labor costs, litigation in certain states, and reinsurance pressures cascading down to consumers. To understand more about what's driving these numbers, read our deep dive on why home insurance premiums keep rising and how reinsurance affects your rates.

States Facing the Biggest Affordability Challenges

Not all homeowners are feeling the pain equally. Geography plays an enormous role in what you pay, and some states have seen catastrophic premium growth.

According to LendingTree's 2026 analysis, Oklahoma now tops the list at $5,298 a year, 121.2% above the national average, followed by Nebraska at $4,956 and Colorado at $4,310. Insurify and The Zebra both identify Florida as the most expensive state when using standardized $300,000 dwelling coverage, with averages between $6,300 and $9,449. Florida has the most expensive home insurance premiums in the country with an average annual cost of $9,449. These costs are driven by hurricanes, high insurance fraud rates and the growing costs of operation in the area.

California, while not always topping the national average list, faces a unique crisis. The ongoing wildfire situation has led major insurers to pull back from the market, forcing more homeowners into the state's FAIR Plan. Our California home insurance crisis guide explains the situation and your options in detail.

How Rising Insurance Is Crushing Housing Affordability

Insurance doesn't exist in a financial vacuum. It's part of the total cost of homeownership alongside your mortgage payment and property taxes. Together, these three costs are squeezing homeowners from all sides.

Home insurance now represents a meaningful share of a typical homeowner's monthly mortgage payment, a share that has grown significantly as premiums have outpaced inflation. According to the Dallas Fed, insurance now makes up 14% of the average monthly mortgage payment, up from just 10% in 2013. When insurance costs rise, escrow requirements rise with them, which effectively increases your monthly mortgage payment without your lender changing your interest rate. Learn more about this dynamic in our guide on home insurance and your mortgage payment.

The impact extends beyond budgets. 47% of homeowners would struggle to pay their mortgage if premiums rose. And 74% said homeowners insurance is a significant portion of their housing budget. Many others have backed out of deals or seen sales fall through because of homeowners insurance costs. The pressure is so significant that some homeowners are relocating entirely, a trend explored in our analysis of climate insurance migration.

Check out our full home insurance cost breakdown by state to see exactly where your state stands and what you can realistically expect to pay.

What To Do When Home Insurance Is Too Expensive

Feeling priced out doesn't mean you're out of options. Here are the most effective strategies, ordered from most impactful to supplementary.

1. Shop Multiple Carriers Every Single Year

Rates vary dramatically between insurers for the same home. State Farm came in as the cheapest large home insurance company, with an average annual rate of $2,415. (USAA had even less expensive policies at $1,940 per year, but they're available only to the military community and some federal workers.)

The key is comparison shopping. Use aggregator tools and get at least 3 to 5 quotes before renewing. Learn how to do this effectively with our guide on cheap home insurance strategies, and explore 17 proven ways to lower your premium before making any decisions.

2. Work With an Independent Agent

Unlike captive agents who represent one company, independent agents can access dozens of carriers to find competitive pricing for your specific risk profile. This is especially valuable in high-risk states where standard markets are thinning out and regional carriers may offer significantly better rates. If your insurer has already announced it's leaving, our guide on what to do when your insurance company leaves your state walks you through every alternative.

3. Stack Every Available Discount

Most homeowners leave serious money on the table by not claiming all the discounts they qualify for. Insurify reports that bundling home and auto insurance typically saves up to 25%, with State Farm offering an average bundling discount of 25%. Other key discounts include:

• Claims-free history (up to 15 to 25% off with some carriers)
• New or renovated roof (especially impact-resistant materials)
• Monitored security systems (up to 15 to 22% with insurers like The Hartford)
• Newer home discounts (up to 25% for homes less than 10 years old)
• Loyalty discounts (around 5% after 3 to 5 years, 10% after 6+ years)
• Paid-in-full discounts (5 to 10% on average)
• Gated community discounts (up to 20%)

Stacking the right combination can reduce your premium by 20 to 35% or more.

4. Raise Your Deductible Strategically

Moving from a $500 to a $1,000 or $2,500 deductible can reduce your premium by 10 to 25% depending on your insurer, location, and home value.

Important caveat: Only raise your deductible to an amount you could realistically pay out of pocket. Keep the difference in a dedicated emergency fund. Learn more about how coastal homeowners handle wind deductibles before making any changes.

5. FAIR Plans as a Last Resort

If private insurers won't cover your home or their rates are simply unaffordable, your state's FAIR (Fair Access to Insurance Requirements) Plan provides basic property insurance as a last-resort option. FAIR Plans are state-mandated insurers designed for homeowners and businesses who can't obtain coverage in the regular market, typically used as a last resort for high-risk or hard-to-insure properties.

FAIR Plans typically offer much more limited coverage than standard policies. Coverage usually includes basic dwelling protection, with personal belongings and additional structures available only as optional add-ons. Liability, theft, and water damage are often excluded. California's FAIR Plan illustrates the strain on these programs: it has grown to 684,388 policies with $750 billion in exposure as of March 2026, and is planning an average 30% rate increase this fall, its first hike since a 16% increase in 2023. FAIR Plans are a lifeline, not a first choice. Always try the private market first, and consider exploring high-risk home insurance options before settling on the FAIR Plan.

6. Review Your Coverage Carefully (But Don't Strip It Bare)

There may be legitimate ways to trim your policy without leaving yourself dangerously exposed:

• Remove duplicate coverages (e.g., if you have a separate umbrella policy)
• Reassess scheduled personal property riders for items you no longer own
• Review your liability limits relative to your actual net worth

However, never reduce your dwelling coverage below what it would cost to fully rebuild your home. Many Americans are already underinsured, which can leave a major coverage gap after a total loss. That is the worst outcome of all.

What NOT To Do And the Future Outlook

Never Go Uninsured or Underinsured

Many homeowners are tempted to drop coverage to save money. The financial consequences make this an incredibly dangerous choice. Read our guide on whether home insurance should be optional to understand the full risks.

• Your mortgage lender requires it. If your coverage lapses, your lender can impose force-placed insurance, a policy that protects only the lender, not you, at a premium that often exceeds what you would have paid on the open market.
• A single disaster can be financially ruinous. Without coverage, you are personally responsible for 100% of repair or rebuild costs, which can easily exceed $200,000.
• You face personal liability exposure. If someone is injured on your property, you're on the hook for medical bills and legal fees with no policy to backstop the claim.

What's Being Done And What to Expect

Several states are implementing targeted reforms to address the crisis in 2026. Florida is the clearest success story. Under the approved rates, the vast majority of Citizens policyholders statewide will receive a premium decrease, with a statewide average reduction of 8.7%. Over 330,000 policyholders across all 67 counties will see rate decreases, and more than 150,000 policyholders will receive reductions of 10% or greater. The largest cuts are concentrated in South Florida: Broward County is seeing average reductions of 14.1%, Miami-Dade 14.0%, Palm Beach 11.9%, and Monroe County 11.3%. Multiple private carriers have also filed for reductions of 5 to 15%, with State Farm now Florida's largest carrier and 17 new homeowner insurance carriers entering the market since reform passed.

Florida's reforms have also tightened claims handling. The time for insurance companies to pay or deny a claim was reduced from 90 to 60 days, with the Florida Office of Insurance Regulation able to extend that window in specific circumstances. Insurance companies must also provide a 1.75% premium deduction on homeowners insurance policies in Florida going into 2026. For a full state-by-state breakdown, see our guide on home insurance legislation and reform in 2026.

The broader outlook remains challenging. AM Best upgraded the U.S. homeowners insurance market outlook from Negative to Stable in late 2025, but most areas should still expect increases of under 10% in 2026, while high-risk regions in hurricane, tornado, and wildfire zones may continue seeing double-digit hikes. Climate-driven losses continue to outpace premium growth in those markets. The best path forward for individual homeowners is aggressive cost management through shopping, discounts, and home hardening, not waiting for reform to deliver relief. If you're worried about how rising costs affect property value, our guide on home insurance and resale value explains the broader market impact.

Frequently Asked Questions

Is home insurance legally required?

Home insurance is not required by law, but it is almost universally required by mortgage lenders as a condition of your loan. If you allow your coverage to lapse, your lender can purchase force-placed insurance on your behalf at your expense, which typically costs more and covers far less than a standard policy. If you own your home outright, you are technically free to go without coverage, but doing so exposes your single largest asset to complete financial loss.

What states have the most expensive home insurance in 2026?

Oklahoma now leads LendingTree's 2026 ranking with average annual premiums of $5,298, while Florida tops Insurify and The Zebra's analyses with averages between $6,300 and $9,449 depending on methodology. Nebraska, Colorado, Kansas, Louisiana, and Texas also rank among the most expensive states, with premiums between $4,000 and $6,000 per year. These high costs are driven primarily by hurricanes, tornadoes, severe hail, and wildfires, combined with rising construction costs and, in some states, high litigation activity.

What is a FAIR Plan and should I consider it?

A FAIR Plan is a state-run insurer of last resort available in most states. It is designed for homeowners who have been denied coverage by private market insurers due to high-risk location or property condition. FAIR Plans generally offer more basic coverage at higher costs than comparable private policies and often exclude important protections like liability, theft, and water damage. They should be considered only after exhausting private market options, especially since plans like California's are facing 30% rate hikes in 2026.

How much can I save by raising my home insurance deductible?

Increasing your deductible from $500 to $1,000 can reduce your annual premium by roughly 10 to 15%. Moving to a $2,500 or higher deductible can save 20 to 25% or more, depending on your insurer, state, and home. The trade-off is that you must be financially prepared to cover that higher out-of-pocket amount if you file a claim, so always set aside your premium savings in a dedicated account to cover the gap.

Will home insurance get cheaper anytime soon?

The near-term outlook is mixed. Most areas should see annual increases moderate to under 10% in 2026, but high-risk regions in hurricane, tornado, and wildfire zones may continue seeing double-digit hikes. Florida is the clearest exception, where reforms have driven an average 8.7% Citizens rate cut and 5 to 15% reductions among private carriers. The most reliable path to lower premiums remains proactive shopping, stacking discounts, and home hardening improvements.