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Home insurance costs jumped 62% from 2022 to 2025, based on our analysis, and rising rates are expected to continue in 2026.
The average cost for 14 large home insurance companies increased by about $980 from $1,582 in 2022 to $2,565 in 2025. That’s based on our evaluation of rates for $350,000 in dwelling coverage, with $100,000 in liability insurance and a $1,000 deductible.
Tariffs, severe weather and high building costs are fueling the trend. This comes at a time when more insurers are using artificial intelligence to process inspections and claims. While it’s too soon to tell how that will affect rates, it may impact pricing in the future.
Here’s a closer look at home insurance trends for 2026.
Tariffs Spark Higher Insurance Costs in 2026
Building costs, including labor and materials, are still high, and they’re being worsened by tariffs on home materials, potentially leading to higher homeowners insurance costs. Tariffs are in essence a tax on foreign products, which President Donald Trump sees as an avenue to encourage companies to keep more jobs in the U.S.
A major downside of tariffs, though, is that these added costs typically wind up on the backs of American consumers through higher costs for foreign-made goods. Trump has imposed tariffs on virtually all imports.
“The cost of labor and materials will always be baked into the cost of insurance. Tariffs are currently a concern due to where we source many types of car parts and home materials,” says Andrew Biscay, president and insurance broker at Minnesota-based South Lake Agency.
CRC Group, a brokerage and underwriting specialty insurance company, predicts tariffs may disrupt supply chains, which can lead to delays, shortages and inefficiencies. CRC particularly highlighted construction materials coming from neighboring trade partners Canada and Mexico.
Tariffs on lumber and other materials lead to higher costs to build and rebuild homes, which directly affects how home insurance companies “determine replacement cost valuations and, ultimately, policyholders’ reported values,” according to the CRC Group.
The National Association of Home Builders estimates that 7% of goods used in new residential construction in 2023 came from a foreign country, which could now be subject to tariffs. Over one-quarter of those foreign-produced goods are imported from China, 11% from Mexico and 8% from Canada. Those three countries make up nearly half of foreign-produced goods used in home construction.
If high tariffs remain in effect, expect to see higher premiums. It’s also a good idea to check your home insurance policy’s dwelling coverage annually and double-check with your insurance company that you have enough coverage to properly rebuild your home if it gets destroyed.
Severe Weather Triggers Higher Claims
Another concern is severe weather. Cimate change is one of the most significant factors driving higher home insurance costs, according to Kenneth Klein, professor of law at California Western School of Law.
Insurance companies paid out nearly $113 billion in insured property losses related to natural catastrophes in 2024, according to the Insurance Information Institute.
Aon, a global consulting firm, reports that 18 severe-weather events in the U.S. in the first half of 2025 led to more than $1 billion in insured losses each. Natural catastrophe in the U.S. comprised over 90% of global insured losses in the first half of the year, reaching a total of about $92 billion. That includes the California wildfires in January, which resulted in an estimated $23 billion in insured losses, according to Aon.
To recoup those losses, home insurers increase home insurance rates, even for homeowners who didn’t file claims.
“The frequency and severity of claims is projected to continue to rise over time. Warmer temps lead to more moisture in the air, which creates bigger storms. This trend will continue and extend losses for carriers which will translate to [higher premiums],” says Biscay.
Beyond higher insurance costs, there’s another problem with severe weather: You might not have the right coverage or enough to properly cover you.
The American Property Casualty Insurance Association says that homeowners whose home insurance claims are denied following a major event like a hurricane are often underinsured or don’t have the right coverage. One major issue is that standard home insurance doesn’t typically cover flood damage. You instead need a separate flood insurance policy, which homeowners often don’t possess.
If severe weather continues to be the norm, more homeowners will wind up getting stuck without enough or the right coverage.
Insurers Dive Into AI in 2026
Home insurance companies are relying more on artificial intelligence. Two examples that Biscay points to are exterior inspections when writing new policies and investigating home insurance claims to find damage.
“You’ll see more and more of this. I don’t think we’re too far off from inspections being done 100% with drones and AI, even remotely,” says Biscay.
CAPE Analytics, an AI company that works with insurers to help detect potential issues, estimates that home insurers will use AI more commonly for routine property claims processing. In fact, the AI company claims that 90% of insurance executives suggest that AI is a “top strategic initiative for their organizations.”
An estimated 70% of insurance companies have implemented AI to help with at least one business function as of April 2025, according to CAPE.
Another piece of AI that’s already having an impact is smart home devices that can send and receive data, such as tools that alert the homeowner of a fire, break-in or water leak.
CAPE Analytics says using those technologies with AI-driven claims processes may help insurers move away from more reactive claims processes and catch problems before they result in costly damage and claims. In fact, CAPE Analytics estimates that these kinds of devices can reduce water leak-related insurance losses by up to 90%.
Smart devices can additionally lead to policy discounts. For instance, USAA, a home insurance provider for veterans, military members and their families, estimates you can save between 5% and 20% through smart home device-related discounts.
Expect to see more of those kinds of policy discounts if home insurers find that interconnected devices lead to fewer claims and savings for them.
How To Find the Best Home Insurance in 2026
The best home insurance company for you might be different from that of your neighbors and friends. Home insurance companies base rates on multiple factors, such as where you live, the materials that make up your house, your claims history, the property’s claims history, your coverage limits and deductible and more.
Steps to find the best home insurance include:
- Determine how much coverage you need. Your dwelling coverage amount should match the cost to rebuild your house, based on local construction and material costs. You’ll also want enough liability home insurance to cover what could be taken from you in a lawsuit.
- Research coverage and discounts. Research the types of coverage and discounts offered by different insurers. For example, you may want to consider only companies that offer extended or guaranteed replacement cost coverage or ones that have generous home and auto insurance bundling discounts.
- Get quotes from multiple companies. Quotes for homeowners insurance can vary significantly depending on the company. That’s why it’s important to compare home insurance quotes from multiple companies. Don’t just choose the cheapest. You’ll also want to make sure to check ratings and reviews of the company.