The average premium for a new policy rose 8.5% from a year earlier, down from an 18% increase in 2024. Despite the slower pace of growth, premiums remain at record levels and now account for about 9% of the typical homeowner’s monthly mortgage payment.
“Carriers are back to rate adequacy, technology is helping them assess risk more accurately, and calmer weather in the latter half of the year gave the market a chance to steady,” said Ben Madick, CEO and co-founder of Matic. “Even so, homeowners are still facing very high costs, and climate-related uncertainty will continue to drive pricing and affect affordability in 2026.”
Insurers are shifting more financial responsibility to homeowners. Average deductibles increased 22% in 2025, and insurers are placing greater emphasis on property-specific risk factors, including roof age. Tools such as AI-driven inspections, satellite imagery and drone assessments are being deployed to evaluate properties and price policies based on actual conditions.
Insurance pricing and availability continue to vary widely by geography, Matic found. Colorado, Texas and Georgia saw significant premium increases driven by climate exposure and regulatory factors.
Nationally, coverage availability improved, with the average number of quotes per consumer rising 78% from the market’s low point in 2024.
In higher-risk states like California, Florida and Texas, many homeowners remain dependent on the excess and surplus market. Excess and surplus policies accounted for 16% of Matic policies in these states by the end of 2025, up from less than 2% in 2023.
But rising insurance costs are increasingly affecting the mortgage process as higher premiums raise borrowers’ debt-to-income ratios, delay closings and, in some cases, prevent borrowers from qualifying for loans.
“Insurance is playing a much bigger role in housing outcomes than it did even a few years ago,” Madick said. “When premiums are high and options vary widely by location, having clarity on cost and coverage earlier in the process can make a meaningful difference for both borrowers and lenders.”
Looking ahead to 2026, Matic expects several trends to continue, including climate and catastrophe risk remaining a driver of pricing and underwriting decisions.
Affordability and coverage availability challenges are expected to persist as premiums remain elevated. AI adoption when shopping for and understanding insurance coverage should increase, while proactive risk-mitigation efforts should expand.
