As annual homeowners insurance premiums hit $4,000 in some markets, homeowners with $5,000 deductibles are reevaluating coverage, questioning whether the financial burden justifies the protection. The trend reflects broader strain on household budgets amid rising insurance costs.
- Annual homeowners insurance premiums now exceed $4,000 in certain markets.
- A $5,000 deductible is prompting some homeowners to cancel coverage.
- Premium increases are linked to climate-related claims and construction cost inflation.
- Over 12% year-over-year rise in average insurance costs reported in early 2026.
- Uninsured homeowners face potential repair costs exceeding $50,000 per incident.
- Policy cancellations may affect neighborhood values and public service demands.
More homeowners are considering dropping their insurance policies despite the risks, driven by escalating premiums and high deductibles. In several regions, annual premiums now exceed $4,000, a steep increase from five years ago. One homeowner cited a $5,000 deductible as a key factor in deciding to cancel coverage, arguing that with no mortgage and limited equity, the financial upside of insurance is negligible. The decision to forgo insurance is especially notable among those with paid-off homes. Without a lender requiring coverage, policyholders face fewer external pressures to maintain protection. However, this choice exposes them to substantial out-of-pocket costs in the event of fire, storm damage, or theft—expenses that could exceed $50,000 for major structural repairs. Industry data shows a 12% year-over-year rise in average homeowners insurance premiums as of early 2026, fueled by climate-related claims, aging infrastructure, and rising construction costs. Insurers report increased underwriting scrutiny, with some high-risk ZIP codes seeing rate hikes above 25%. As a result, many households are forced to choose between affordability and protection. The shift could have ripple effects on local economies, especially in areas with concentrated property damage. Without insurance, homeowners may delay or skip repairs, impacting neighborhood values and increasing public assistance burdens. Municipalities may also face higher emergency response costs when uninsured residents require aid after disasters.