Homeowners Step Back From Coverage as Premiums Climb

Home insurance costs continue to rise across the United States. As premiums increase, some households decide not to renew their policies. Instead, they take on the financial risk themselves. This shift has led to a growing number of self-insured or non-insured homeowners in multiple regions.

Several states illustrate how quickly this change is happening. Idaho saw roughly a 9 percent drop in homeowner policies from 2022 to 2023. California also shows mounting pressure as wildfire risk grows, reinforced by major fires in January 2025. Florida has dealt for years with hurricane exposure and litigation driven expenses, although recent regulatory reforms have started to restore market confidence and improve conditions for consumers. Louisiana remains limited by capacity challenges. Additionally, repeated hail and wind events in areas such as Texas and Colorado have contributed to continued rate increases and constrained market capacity.

Key Drivers Behind Higher Premiums

A combination of risk and cost factors explains why home insurance rates keep climbing.

To begin with, severe weather events happen more often and produce higher losses. Wildfires drew national attention in 2024, but they are only one part of the trend. Hail, high winds, winter storms, and flooding have also increased in frequency and in total cost. Some states now face major events every few years instead of once per decade. As claims rise, insurers adjust pricing to reflect the higher loss patterns.

Next, rebuilding costs have surged. Inflation, supply chain delays, and labor shortages have driven repair and reconstruction expenses sharply upward. Because insurers base coverage on replacement value, higher building costs directly push premiums higher.

At the same time, insurers have adopted more disciplined underwriting. Many carriers now re-evaluate how they write business rather than broadly pulling back. They focus on confirming that homes carry true replacement value and that the rating matches local weather exposures. This approach connects to long-term profitability and sustainability.

In response, carriers also encourage homeowners to reduce risk through property improvements. Examples include upgrading roofs, clearing defensible space, and installing smart monitoring systems. These actions support loss prevention and strengthen the overall insurability of properties.

Financial Strain for Households and Operational Pressure for Insurers

These conditions make coverage both more expensive and, in some areas, harder to secure. Consequently, many households face difficult financial decisions. Some can afford higher premiums and remain insured. Others decide to go without coverage, either by choice or because costs exceed their budgets.

Self-insurance can be workable for people who have the financial ability to absorb a major loss. However, many families move toward self-insurance because rising premiums price them out of the market. They must compare the risk of going without protection to other essential living costs.

Insurers are adjusting their strategies to keep serving homeowners. Instead of wide market exits, many focus on rate adequacy, underwriting discipline, and proper property valuation. These steps aim to preserve the continued availability of coverage while keeping portfolios financially stable.

Some property markets are beginning to show early signs of balance. Still, not every line follows the same path. Liability remains under pressure due to large jury awards, third-party litigation funding, and social inflation. These forces continue to challenge insurers and consumers even as some property conditions stabilize.

Prevention and Partnership Shape Long-Term Insurability

The outlook for home insurance is changing. The central focus has shifted away from whether rates will fall. Instead, attention now centers on how insurers, lawmakers, agents, and homeowners can work together under new conditions. Prevention and partnership play a major role in this effort.

Home hardening and proactive maintenance form a core part of long-term insurability. Practical measures include installing central station fire systems and water shutoff systems, building defensible zones in wildfire areas, strengthening hurricane preparedness, and selecting construction methods suited to local environmental threats. These actions reduce the likelihood and severity of losses and help maintain insurer interest in a market.

The Expanding Role of Insurance Advisors

Findings from the 2025 PRMA Private Client Insights Survey show that many homeowners feel confident about their insurance but still worry about what their policies exclude. This gap highlights a need for clearer understanding of how coverage works and what protection it provides.

Risk management discussions help close that gap. Homeowners benefit when they understand their policy terms, their personal risk tolerance, the deductible level that fits their situation, and when to file claims versus absorb smaller losses. These choices affect both current protection and future insurability.

Therefore, agents now play an even more central role. Many move beyond placement tasks and act as strategic risk advisors. They help clients explore risk reduction options, evaluate different markets, understand trade-offs, and plan for renewals ahead of time. Through this work, agents support homeowners who want to stay insured despite higher costs.

Where the Trend Leaves the Market

Rising premiums have pushed more homeowners toward self-insurance. In some cases, this reflects deliberate risk acceptance. In others, it reflects limited access to affordable coverage. Either way, households that step away from insurance assume full responsibility for large losses that events like wildfires, hurricanes, hailstorms, or floods can cause.

The current environment places sustained attention on accurate valuation, disciplined underwriting, and property-level prevention. These factors influence whether homeowners can maintain coverage and whether insurers can continue to offer protection in high-risk areas.