What you Need to Know about Homeowners Insurance

I've been having more conversations about insurance lately than I ever used to have as a real estate agent. Not just with my buyers and sellers but with almost everyone I talk with, I try and find ways to slip in advice about dealing with insurance, because we are learning so much in our weekly sales meetings and from talking with our trusted partners and advisors in the industry so frequently. Though it should be noted, here (as well as below) that I'm not an insurance professional, and this post isn't insurance advice. For coverage questions specific to your property, a licensed insurance agent or broker is your best resource - and i’m happy to refer you to one if you have any questions.

But here’s the deal - the insurance landscape has been changing fast in the last few years, and it’s meant that buyers have to think more about the insurability of a house before they make an offer, sellers have to think about the insurability of their home before they decide to sell, and homeowners have to think about the pros and cons of utilizing their insurance coverage more carefully, at the risk of rates going up or impact to the the insurability /saleability of their property in the future.

So I am putting together some notes about what is going on, what’s driving these changes, and what it means for you if you’re a home buyer, seller or owners right now.

The Short Version

The worst of the premium spike years appears to be behind us, at least nationally. After double-digit rate increases in 2023 and 2024, growth slowed in 2025 and the market is showing early signs of stabilization. AM Best, the insurance industry's credit rating agency, upgraded the homeowners insurance segment from "negative" to "stable" in December 2025. But stable still doesn’t mean cheap. Premiums are still at historic highs, and they're still going up. Nationally, the average homeowners insurance premium is expected to reach around $3,057 per year in 2026, up from $2,948 in 2025. The U.S. homeowners spent $21 billion more on insurance in 2024 than they did in 2021. That gap doesn't disappear overnight just because the rate of increase is slowing down.

Here in Washington, We're in a Better Position

Washington is still one of the more affordable states in the country for homeowners insurance. The average annual premium here is around $1,533 to $1,600 depending on the source, compared to a national average nearly double that. And while our rates are expected to tick up about 4% to 4.4% through 2026, that's low compared to places like Florida, where the average topped $8,000 annually in 2025, or Louisiana, which saw a 58% single-year increase.

For buyers relocating here from California or Florida, the insurance rates are a nice surprise. The total cost-of-homeownership in the Pacific Northwest can be more reasonable both due to home prices and lower cost of insurance. But we still aren’t immune from the insurance industry’s impacts. Climate risk factors into underwriting decisions here including wildfire exposure, the Cascadia Subduction Zone, and our rainfall and flooding patterns. These are all things carriers are looking at and trying to model with more precision. Being relatively safe from weather events like catastrophic hurricanes is a regional advantage, but it doesn't mean our insurance market is static.

So What’s Driving the Changes

A few things are happening simultaneously:

Climate risk is now baked into underwriting. Insurers are using aerial imagery, satellite data, drone assessments, and AI-driven risk models to evaluate individual properties with more detail than they used to. Roof condition, proximity to vegetation, elevation, drainage patterns, is all being assessed in ways that weren't standard five years ago. This means two houses on the same block can get very different quotes.

Deductibles went up, not just premiums. Average deductibles increased roughly 22% in 2025 as insurers shifted more financial responsibility to policyholders. This is easy to miss if you're only looking at the premium number on your renewal. The real question is- what would you actually pay out of pocket if something happened, and would you have the cash on hand to do so?

Some carriers pulled back from high-risk markets entirely. In California, Florida, and Texas in particular, major carriers stopped writing new policies entirely. The gap has been filled by what's called the Excess and Surplus (E&S) market, where carriers operate outside standard state regulations and typically charge more. This isn't a Washington phenomenon right now, but it's worth understanding because it tells you something about where the industry is heading.

Replacement costs are still elevated. Construction material costs and labor haven't returned to pre-pandemic levels. That means the cost to rebuild a home after a loss is higher than it was a few years ago, and insurance needs to reflect that, which it sometimes doesn't unless you're actively keeping your coverage in line with current replacement costs.

What This Means for Buyers

Insurance used to be the last box you checked before closing - now it’s one of the first things I have buyers look at after we tour a home. And, according to recent industry data, more than half of buyers are reporting that insurance is now a contingency in their final offer. This is a new and significant shift.

Here's what I advise buyers to think about:

Get an insurance quote before you get deep into a transaction. Some properties, especially older homes, homes with certain roof ages, older electrical systems (knob-and-tube in particular), or properties in high-risk wildfire or flood zones, can come with surprisingly high premiums or limited coverage options. Knowing this before you make an offer or contingencies is important information.

Ask about the property's claims history. A CLUE report (Comprehensive Loss Underwriting Exchange) shows insurance claims filed on a property. Multiple recent claims can affect your ability to get affordable coverage, even if the issues were repaired.

Flood insurance deserves a real look. Flood risk is expanding beyond obvious coastal and riverside zones. FEMA flood maps don't always capture the full picture, and standard homeowners policies don't cover flooding. If the property has any history of water issues, or sits in an area with drainage challenges, it's worth getting a flood insurance quote as part of your due diligence.

What This Means for Sellers

The conversation has shifted for sellers too. Because buyers are more informed and cautious about insurance costs, sellers who get ahead of it are better positioned.

If your home has an aging roof, outdated systems, or deferred maintenance, those items are increasingly likely to come up in the insurance underwriting process, not just the buyer's inspection report. A buyer who discovers at the quote stage that their insurance is going to cost significantly more than they expected, or that coverage has conditions attached, may come back and renegotiate, or walk away, if they have contingencies in their offer.

A few things worth thinking about during preparation for list:

Know what condition your roof is in. Carriers are paying very close attention to roofs right now. Age, material, and condition all affect insurability. If your roof is approaching the end of its useful life, it's worth getting an assessment before listing so you're not surprised by the conversation later.

Update your own homeowners policy to reflect current value. If you've done improvements but haven't adjusted your coverage, you may be underinsured based on what your home would actually cost to replace today. This matters both for your protection while you're still in the home and as a disclosure consideration.

Be prepared to answer questions about prior claims. Buyers are asking, and it's the kind of thing that comes out anyway through the CLUE report. Transparency early saves headaches later.

What This Means for all homeowners

Homeowners need to be paying more attention to insurance too - costs, renewals, and the things around your home that could become a liability.

Be proactive about home maintenance and aging systems. Things like aging roofs, knob-and-tube wiring, old fuse boxes, aging plumbing, or outdated HVAC can make you vulnerable and carriers may require upgrades before they'll renew even if everything still functions. Worth knowing the conditions of your systems and budgeting for these potential repairs before your next renewal letter arrives.

Be aware of liabilities. Trampolines, pools, certain dog breeds, or even where you store propane tanks and wood piles can be treated as liability risks. Your insurance company can send an inspector out at anytime, and some insurers won't renew policies with these features unless there's mitigation in place. I’ve heard of homeowners receiving letters with notice to take action immediately - so again, best to be aware of these potential issues and be proactive about them.

Pause and evaluate before you file a claim. Seems silly to have home insurance and not use it. But the implications of making too many claims or certain types of claims can damage your ability to get insurance coverage, as well as the ability of a future home buyer to get insurance on your house in the future. If you have a water event in your home, check with your insurance agent before you call your insurance provider. Even calling to check coverage with a provider can create a report of an incident, whether you end up filing a claim or not, and end up damaging your insurability, and potentially a future buyer's ability to get coverage on the property.

Check your dwelling coverage against today's replacement cost. Your home's market value and what it would cost to rebuild it are two different numbers. Replacement cost accounts for current construction materials and labor, and that number has gone up significantly over the past few years. An easy call to your agent can tell you whether you're adequately covered.

Ask about your deductible. As noted above, deductibles have gone up for a lot of policyholders in the past year. If you haven't looked closely at yours lately, you may be carrying more out-of-pocket risk than you realize.

Don’t wait for renewal - shop around anytime - you can do a policy review whenever you want, and it’s smart to shop for insurance at least annually to make sure you have the right coverage and are getting good rates. Contact your insurance broker and ask for a policy review. The market has more capacity right now than it did in 2023 and 2024, which means there's more competition between carriers. If you haven't gotten a comparison quote in a few years, it's worth doing. Loyalty doesn't always pay in insurance.

Think about what you don't have. Standard homeowners insurance does not cover floods, earthquakes, or sewer backups by default. For those of us in the PNW, where the Cascadia Subduction Zone is a real geological feature and heavy rain is just October through April, it's worth knowing what riders or supplemental policies might make sense for your specific situation.

The Bigger Picture and What to do about it

What I keep coming back to is that insurance used to be a relatively quiet background cost of homeownership. You bought it and it renewed annually. Maybe you shopped around occasionally, but it wasn’t something that regularly came up in conversation. Now I talk about it almost daily because of the structural shift in how insurers are evaluating risk. They're more granular, more data-driven, and more willing to act on what the data shows. That means coverage is more tailored, more variable property to property, and more tied to the actual condition and location of the home than it used to be.

For buyers, this is information. For sellers, it's worth getting ahead of. For homeowners, it's a reason to dust off your policy and actually read it.

But here’s what I’ve been struggling with - Insurance exists to protect you from a loss. That's the whole point of paying into the policy, so when the system starts penalizing you for using it, or dropping you because a pipe that was improperly installed burst and water flooded your basement, it stops feeling like protection and starts feeling like a trap.

I know that we are dealing with forces like major river flooding and wildfires destroying entire towns, and other natural disasters that are impacting the insurance industry in large ways. But while homeowners are getting non-renewed and premiums are climbing, the insurance industry posted record profits in 2024.

The insurance industry is imperfect in ways that can visibly hurt people. Knowing how it works is the best tool you have. Insurance isn't the most glamorous part of owning a home, but it's one of the most consequential, and I want to help empower you to stay ahead of the curve. I hope some of the information in this post will help you make more informed financial decisions about your home improvements, maintenance and insurance costs.

Note again, for good measure: I'm not an insurance professional, and this post isn't insurance advice. For coverage questions specific to your property, a licensed insurance agent or broker is your best resource. And my favorites include:

• Alex B. with Moreland Insurance - https://morelandagency.com/our-team/alex-busilacchi/

• Julie Dow with Allstate - https://agents.allstate.com/julie-c-dow-marysville-wa.html

Have more questions about how insurance is showing up in your buying or selling process? I'm happy to talk through what I'm seeing. Reach me at 206-898-9609, peri@windermere.com.

Let’s work together

If you've made it this far, you probably care about doing this right. That's exactly the kind of buyer or seller I love working with.

I brought 20 years of business experience to real estate for one reason — I believed people deserved better guidance on one of the biggest financial decisions of their lives. The last four years have been about delivering on that, one client and one transaction at a time. My approach is built around education and empowerment, so you always know where you stand and what comes next, whether you're buying your first home or selling one you've loved for years.

If you're ready to approach your next move with this kind of clarity and intention, and you want someone who treats your transaction with genuine care and rigor, I'd love to be part of that process. You deserve to feel confident and informed at every step, not just at the end. Reach out and let's start the conversation.