If you've been hoping for a break on your insurance bills, 2026 may not deliver the relief you're looking for. After a brutal stretch that saw home insurance premiums spike 18% in 2024 alone, new forecasts suggest the pressure isn't letting up. Homeowners can expect another 8% increase in 2026, with a matching 8% jump projected for 2027, according to estimates from real estate analytics firm Cotality.

Auto insurance tells a similar story. While the rate increases of 4-7% projected for most drivers are smaller than the double-digit hikes of recent years, they still represent a continued erosion of household budgets—particularly in states prone to severe weather or high vehicle theft rates.

The Climate Factor

The primary driver behind persistently rising premiums is no secret: climate risk. Severe convective storms, wildfires, hurricanes, and flooding events have become more frequent and more costly, creating ongoing uncertainty for insurers trying to price policies accurately.

States like Arizona, Michigan, Nebraska, North Dakota, South Dakota, Utah, Washington, and Wyoming have seen home insurance increases of 40% to 70% over the past few years. These aren't outliers—they're the new normal for regions facing elevated natural catastrophe exposure.

"Climate and catastrophe risk will remain a primary driver of pricing and underwriting decisions," noted industry analysts, adding that severe weather patterns are creating "ongoing uncertainty across many regions."

The Tariff Wildcard

A new factor is entering the equation for 2026: tariffs. With the Trump administration implementing duties on imported goods, the cost of building materials and auto parts is expected to rise. For insurers, this means higher repair and replacement costs—expenses that inevitably get passed on to policyholders.

The tariff impact could be particularly acute for auto insurance. Repair costs remain elevated, supply chain bottlenecks continue to affect parts pricing, and now additional duties threaten to reverse the temporary rate relief some states saw in early 2025.

Regional Disparities

Insurance costs vary dramatically by location, and 2026 will likely widen those gaps. For auto insurance, Northeastern states like Maryland and New York are projected to start the year with the nation's highest rates. Meanwhile, some competitive markets in the Midwest may see more modest increases—or even rare rate decreases for safe drivers.

Home insurance shows similar geographic patterns. Coastal areas face hurricane exposure, Western states contend with wildfire risk, and the central U.S. battles tornado and hail damage. Each of these perils carries its own pricing implications, and insurers are increasingly granular in their risk assessments.

The Deductible Squeeze

Rising premiums aren't the only cost pressure homeowners face. Average deductibles rose 22% in 2025, meaning policyholders pay more out of pocket before coverage kicks in. Insurers are also scrutinizing property-specific risk factors more closely—roof age, in particular, has become a major underwriting consideration.

For many homeowners, insurance premiums now represent roughly 9% of the typical monthly mortgage payment. That figure would have seemed extraordinary a decade ago; today, it's simply the cost of coverage in a climate-altered world.

What You Can Do

While you can't control weather patterns or tariff policy, there are strategies to mitigate insurance cost increases:

  • Shop around: Insurance markets vary significantly by carrier. Getting quotes from multiple companies remains the most effective way to find competitive rates.
  • Bundle policies: Many insurers offer discounts for combining home and auto coverage—savings that can offset premium increases.
  • Increase deductibles strategically: If you have adequate emergency savings, accepting a higher deductible can lower your premium. Just ensure you can cover the out-of-pocket amount if you need to file a claim.
  • Improve your property: Upgrading your roof, installing storm shutters, or adding smart home devices can qualify you for discounts while reducing your actual risk.
  • Review coverage annually: Make sure you're not overinsured—or underinsured. Policy reviews can identify opportunities to right-size your coverage.

The Bigger Picture

Insurance premium increases are more than just a household budget issue—they're becoming an economic force that affects housing affordability, consumer spending, and regional migration patterns. Some homeowners in high-risk areas are finding coverage unaffordable or unavailable, forcing difficult decisions about where to live.

For 2026, the message is clear: budget for higher insurance costs, explore your options aggressively, and consider long-term strategies to reduce your risk profile. The era of cheap coverage appears to be over.