Skyrocketing Homeowners Insurance? – Senior Planet from AARP
The news has recently been filled with people shocked by big price increases in their homeowner’s insurance. The largest increases have followed natural disasters in parts of Florida and California, but the price hikes have affected homeowners across the U.S.
Nearly half (47%) of homeowners reported a premium increase in the past year, marking the highest rate of increases in over a decade, according to the J.D. Power 2025 U.S. Home Insurance Study. Additionally, data from ICE Mortgage Technology indicates that costs for homeowners insurance have surged by 70% in the last five years.
More price hikes are on the horizon. Home insurance premiums are projected to rise by an average of 8% in 2026 and nearly 30% over the next 30 years, as reported by LexisNexis Risk Solutions in its recently released 10th annual U.S. Home Trends Report.
This trend has prompted many homeowners to rethink how they plan for and pay for home insurance.
Location, Location, Location
The same rules that apply to real estate now extend to home insurance. Today, location not only influences price but also availability.
Mitch Katz, a financial planner and partner at Capital Associates in Bethesda, Maryland, notes that the pandemic led many to sell their homes and seek lower-cost alternatives in smaller communities, particularly in states like Florida and Texas, which have no income tax. However, these savings have been offset by rising homeowners’ and car insurance costs. “It’s increased everywhere, but it’s particularly pronounced in areas that benefited the most from Covid,” he explains. “Suddenly, you’re not necessarily saving money, and homeowners insurance is a significant part of that expense.”
The soaring rate increases have left some families searching for more affordable options, while others struggle to afford insurance altogether. There are alternatives, but some will only work for high-income individuals.
Cancel Your Insurance?
Katz recounts a situation where he had to dissuade a client from canceling their homeowners insurance, emphasizing that it’s generally not a viable option. “You can’t just drop homeowners insurance,” he states. Most mortgages require it to protect the lender’s investment. “In this case, the client’s costs had tripled in five years, and they were considering cutting it to save money. However, their homeowners association mandated that they maintain insurance.”
Consider a Higher Deductible
Some financial planners suggest that homeowners with a fully funded emergency fund might reduce premiums by opting for higher deductibles. Many homeowners have deductibles that are too low relative to their financial situation. By increasing deductibles, homeowners can shift more risk onto themselves, potentially leading to lower premiums and cost savings. It’s advisable to review deductibles regularly during financial assessments and policy renewals.
Incorporate Rising Insurance Costs into Your Financial Plan
In financial planning, living expenses typically increase annually at the rate of inflation, while mortgage expenses remain fixed. Homeowners insurance and taxes used to be projected at the inflation rate, but now, especially for clients in states like Florida and California, projections are adjusted to account for much higher rates of increase. “We now anticipate insurance costs rising significantly more than other expenses,” Katz explains.
Self-Insure
This option may not be feasible for most homeowners, including those with higher incomes. “Self-insurance means not taking insurance at all,” says Katherine Frattarola, executive vice president and Head of HUB Private Client at HUB International. “However, this typically applies to individuals without a mortgage, as most lenders require some level of insurance.”
For those with a mortgage, self-insurance might involve choosing higher deductibles. “Some homeowners may opt for a $25,000 deductible instead of $5,000, meaning they assume more risk,” she explains. “Alternatively, they might decide against wind or flood coverage, effectively self-insuring against those risks.”
Frattarola advises clients based on their risk profiles and financial situations. “In some cases, a higher deductible is advisable. If you can sustain a total loss and manage your resources post-catastrophe, full self-insurance might be an option,” she adds. However, it’s crucial to have the necessary resources and support to manage rebuilding after a disaster.
YOUR TURN
How have rising home insurance costs impacted you? How do you handle it? Let us know in the comments!
Rodney A. Brooks is an award-winning journalist and author. The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S. News & World Report and Senior Planet.com. He has also written for National Geographic, The Washington Post, and USA TODAY, and has testified before the U.S. Senate Special Committee on Aging. His book, “The Rise & Fall of the Freedman’s Bank, And Its Lasting Socio-economic Impact on Black America” was released in 2024. He is also the author of the book “Fixing the Racial Wealth Gap.” His website is www.rodneyabrooks.com
Your use of any financial advice is at your sole discretion and risk. Seniorplanet.org and Older Adults Technology Services from AARP make no claim or promise of any result or success.
The news has recently been filled with people shocked by big price increases in their homeowner’s insurance. The largest increases have followed natural disasters in parts of Florida and California, but the price hikes have affected homeowners across the U.S.
Nearly half (47%) of homeowners reported a premium increase in the past year, marking the highest rate of increases in over a decade, according to the J.D. Power 2025 U.S. Home Insurance Study. Additionally, data from ICE Mortgage Technology indicates that costs for homeowners insurance have surged by 70% in the last five years.
More price hikes are on the horizon. Home insurance premiums are projected to rise by an average of 8% in 2026 and nearly 30% over the next 30 years, as reported by LexisNexis Risk Solutions in its recently released 10th annual U.S. Home Trends Report.
This trend has prompted many homeowners to rethink how they plan for and pay for home insurance.
Location, Location, Location
The same rules that apply to real estate now extend to home insurance. Today, location not only influences price but also availability.
Mitch Katz, a financial planner and partner at Capital Associates in Bethesda, Maryland, notes that the pandemic led many to sell their homes and seek lower-cost alternatives in smaller communities, particularly in states like Florida and Texas, which have no income tax. However, these savings have been offset by rising homeowners’ and car insurance costs. “It’s increased everywhere, but it’s particularly pronounced in areas that benefited the most from Covid,” he explains. “Suddenly, you’re not necessarily saving money, and homeowners insurance is a significant part of that expense.”
The soaring rate increases have left some families searching for more affordable options, while others struggle to afford insurance altogether. There are alternatives, but some will only work for high-income individuals.
Cancel Your Insurance?
Katz recounts a situation where he had to dissuade a client from canceling their homeowners insurance, emphasizing that it’s generally not a viable option. “You can’t just drop homeowners insurance,” he states. Most mortgages require it to protect the lender’s investment. “In this case, the client’s costs had tripled in five years, and they were considering cutting it to save money. However, their homeowners association mandated that they maintain insurance.”
Consider a Higher Deductible
Some financial planners suggest that homeowners with a fully funded emergency fund might reduce premiums by opting for higher deductibles. Many homeowners have deductibles that are too low relative to their financial situation. By increasing deductibles, homeowners can shift more risk onto themselves, potentially leading to lower premiums and cost savings. It’s advisable to review deductibles regularly during financial assessments and policy renewals.
Incorporate Rising Insurance Costs into Your Financial Plan
In financial planning, living expenses typically increase annually at the rate of inflation, while mortgage expenses remain fixed. Homeowners insurance and taxes used to be projected at the inflation rate, but now, especially for clients in states like Florida and California, projections are adjusted to account for much higher rates of increase. “We now anticipate insurance costs rising significantly more than other expenses,” Katz explains.
Self-Insure
This option may not be feasible for most homeowners, including those with higher incomes. “Self-insurance means not taking insurance at all,” says Katherine Frattarola, executive vice president and Head of HUB Private Client at HUB International. “However, this typically applies to individuals without a mortgage, as most lenders require some level of insurance.”
For those with a mortgage, self-insurance might involve choosing higher deductibles. “Some homeowners may opt for a $25,000 deductible instead of $5,000, meaning they assume more risk,” she explains. “Alternatively, they might decide against wind or flood coverage, effectively self-insuring against those risks.”
Frattarola advises clients based on their risk profiles and financial situations. “In some cases, a higher deductible is advisable. If you can sustain a total loss and manage your resources post-catastrophe, full self-insurance might be an option,” she adds. However, it’s crucial to have the necessary resources and support to manage rebuilding after a disaster.
YOUR TURN
How have rising home insurance costs impacted you? How do you handle it? Let us know in the comments!
Rodney A. Brooks is an award-winning journalist and author. The former Deputy Managing Editor/Money at USA TODAY, his retirement columns appear in U.S. News & World Report and Senior Planet.com. He has also written for National Geographic, The Washington Post, and USA TODAY, and has testified before the U.S. Senate Special Committee on Aging. His book, “The Rise & Fall of the Freedman’s Bank, And Its Lasting Socio-economic Impact on Black America” was released in 2024. He is also the author of the book “Fixing the Racial Wealth Gap.” His website is www.rodneyabrooks.com
Your use of any financial advice is at your sole discretion and risk. Seniorplanet.org and Older Adults Technology Services from AARP make no claim or promise of any result or success.
