Homeowners' insurance rates have continued to climb amid increasingly extreme natural disasters and elevated replacement costs, but experts predict the market could see meaningful improvement over the next two years.
In 2025, the U.S. weathered its first hurricane season without a storm making landfall in a decade, which resulted in below-average natural catastrophe losses. However, Triple-I reports that other perils like severe convective storms, wildfires and flash flooding are becoming larger drivers of insurer losses. They explain that these "moderate disasters" pose a challenge for traditional catastrophe modeling, which is built around peak perils like hurricanes.
As of 2024, around 45% of homes in the U.S. were in danger of at least one type of severe or extreme climate risk — including flooding, wind, heat, wildfire or air quality. In total, these homes represent a value of around $22 trillion.
Heat and air quality risks are often underdiscussed perils in the industry, but reporting from Realtor.com shows that nearly a third of U.S. homes (valued at nearly $13.6 trillion) are at severe or extreme risk of heat exposure, and around 9% of homes (valued at around $6.6 trillion) face severe or extreme air quality risk. As of 2024, Miami reportedly had the highest total value of homes facing extreme heat risk, while San Francisco had the highest total value of homes at risk from air quality.
In the slideshow above, we'll look at what is likely to shape homeowners' insurance rates and availability in the coming year, according to the U.S. Federal Insurance Office and Triple-I.
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